Question

P=30,000, N=10, S10 = 3221.23. Using double-declining balance method, find D7. 1565-1570 1570-1575 1575-1580 1580-1585 None of the above

Answer 1

Price, P = 30,000

Useful life,n = 10 years

Salvage value, S = 3221.23

We have to calculate the DDB depreciation charges in 7th years.

Depreciation Rate = 2 x = 0.2 10

Depreciation rate = 20% each year.

Calculating the depreciation charge of 7th year manually

$\large D_7 = 30,000\times (1-0.2)^6\times 0.2\\ \\ \implies D_7 = 30,000\times 0.8^6\times 0.2\\ \\ \implies D_7 \approx \$ \ 1,572.86$

Second option is correct 1,570 - 1,575.

The excel I have used just to confirm my calculation. Refer below

Refer the attached screenshot of excel that I have created you can also refer the formula used.

fx = FA24 *0.2 < EY EZ FA FB FC L 16 17 Year 18 0 1 19 20 2 21 3 22 4 Depreciation EOY $ 30,000.00 $ 6,000.00 $ 24,000.00 $ 4,800.00 $ 19,200.00 $ 3,840.00 $ 15,360.00 $ 3,072.00 $ 12,288.00 $ 2,457.60 $ 9,830.40 $ 1,966.08 $ 7,864.32 $ 1,572.8F 6,291.46 $ 1,258.25Y 5,033.16 $ 1,006.63 $ 4,026.53 $ 805.31 $ 3,221.23 23 5 24 6 25 7 26 8 27 9 28 10

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