A machine that cost $160,000 has an estimated residual value of $16,000 and an estimated useful life of four years. The...

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A machine that cost $160,000 has an estimated residual value of $16,000 and an estimated useful life of four years. The compa

Answer 1

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Answer #1

Double-declining rate = (100%/4) × 2 = 50%

Depreciation for first year = $160,000 × 50% = $80,000

Book value at the end of year 1 = $160,000 - $80,000 = $80,000

Depreciation for second year = $80,000 × 50% = $40,000

Book value at the end of year 2 = $80,000 - $40,000 = $40,000

Depreciation for the third year = $40,000 × 50% = $20,000

Book value at the end of year 3 = $40,000 - $20,000 = $20,000

Answer 2

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