A corporation needs you to calculate the carrying value (book value) of a piece of PP&E...
A corporation needs you to calculate the carrying value (book value) of a piece of PP&E at the end of the second year.
Depreciation Method Used => Double-Declining-Balance Method
-
Life of PP&E Asset => 8
-
Invoice Price of PP&E Asset => 121000
-
Setup Charges of PP&E Asset => 54000
-
Salvage Value of PP&E Asset => 9000
Homework Answers
Answer : Carrying value of PPE at the end of two years = 98437.
Solution -
Depreciation rate = [(100/8)×2]
= 12.5×2
= 25
That means, rate of depreciation = 25%
Depreciation for 1st year = 175000×25% = 43750
Depreciation for 2nd year = (175000-43750)×25% = 32813
Therefore,
Carrying value of PPE at the end of two years = (121000+54000) - (43750+32813)
= 175000 - 76563
= 98437.
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