Question

Required information Use the following information for the Exercises below. The following information applies to the questions displayed below.) In early January 2017, NewTech purchases computer equipment for $268,000 to use in operating activities for the next four years. It estimates the equipment's salvage value at $30,000. Exercise 10-8 Double-declining-balance depreciation LO P1 Prepare a table showing depreciation and book value for each of the four years assuming double-declining-balance depreciation. (Enter all amounts positive values.) Depreciation for the Period End of Period Accumulated Year-End Depreciation Book Value Year Beginning-Year Depreciation Book Value Rate $ $ $ Annual Depreciation $ 134,000 67,000 33,500 2017 2018 2019 2020 268,000 134,000| 67,000 33,500 67.000 50% 50% 50% 50% 134,000 201,000 234,500 33.500 30 000 Total $ 234,500 < Prev 8 of 11 Next > e ô

Answer 1

Ans.	Double declining balance method:
	Double declining balance depreciation rate = 2 * 1 / life of assets
		2 * 1 / 4
		50%
	*Depreciation = Remaining value at the beginning of the year * Double declining balance depreciation rate
		DDB Depreciation for the Period			End of Period
	Year	Beginning of period	Depreciation	Depreciation	Accumulated	Book
		Book value	Rate	Expenses (a * b)	Depreciation	Value
	2017	$268,000	50%	$134,000	$134,000	$134,000
	2018	$134,000	50%	$67,000	$201,000	$67,000
	2019	$67,000	50%	$33,500	$234,500	$33,500
	2020	$33,500		$3,500	$238,000	$30,000
	Total
	*In double declining balance method the book value at the end of year is the salvage value of the assets
	So, the depreciation expenses for the 4th year will be calculated as follows:
	Depreciation =   Beginning of period book value - Salvage value
		$33,500 - $30,000
		$3,500