Computer equipment was acquired at the beginning of the year at a cost of $46,250 that has an estimated residual value of $2,800 and an estimated useful life of five years. (a) Determine the depreciable cost $ (b) Determine the double-declining-balance rate % (c) Determine the double-declining-balance depreciation for the first year $

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Gingersnap

14 May, 13:05

Computer equipment was acquired at the beginning of the year at a cost of $46,250 that has an estimated residual value of $2,800 and an estimated useful life of five years. (a) Determine the depreciable cost $ (b) Determine the double-declining-balance rate % (c) Determine the double-declining-balance depreciation for the first year $

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Jerry · Answer 1

Double Declining balance method is the form of accelerated depreciation method, in which value of asset depreciated twice by the rate which is charged in straight line method.

Depreciable Cost = Cost of Asset - Residual value

Depreciable Cost = $46,250 - $2,800 = $43,450

Double-declining-balance rate = [ 2 x (Cost of Asset - Residual value) / Useful life ] / Cost of Asset

Double-declining-balance rate = [ 2 x $46250 / 5 ] / $46,250 = 40%

Double Declining balance depreciation for the first year = $46,250 x 40% = $18,500