On 1/1, a company buys equipment with a cost of $7900, an estimated salvage valu

Question

On 1/1, a company buys equipment with a cost of $7900, an estimated salvage value of $1000, and an estimated useful life of 4 years. Using the double declining balance method of depreciation, calculate accumulated depreciation after year 2. On 1/1, a company buys equipment with a cost of $7900, an estimated salvage value of $1000, and an estimated useful life of 4 years. Using the double declining balance method of depreciation, calculate accumulated depreciation after year 2. On 1/1, a company buys equipment with a cost of $7900, an estimated salvage value of $1000, and an estimated useful life of 4 years. Using the double declining balance method of depreciation, calculate accumulated depreciation after year 2.

Explanation / Answer

DDM Depreciation = 2*(Depreciation as per Straight line method-Accumulated Depreciation)

Cost of the Equipment 7900 Salvage value 1000 Book Value at the begning of Year 1 6900 DDM Depreciation 3450 (6900/4*2) Book Value at the begning of Year 2 3450 (6900-3450) DDM Depreciation 1725

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