On 1/1, a company buys equipment with a cost of $21200, an estimated salvage val

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On 1/1, a company buys equipment with a cost of $21200, an estimated salvage value of $1200, and an estimated useful life of 4 years. Using the double declining balance method of depreciation, calculate net book value after year 1.

On 1/1, a company buys equipment with a cost of $21200, an estimated salvage value of $1200, and an estimated useful life of 4 years. Using the double declining balance method of depreciation, calculate net book value after year 1.

On 1/1, a company buys equipment with a cost of $21200, an estimated salvage value of $1200, and an estimated useful life of 4 years. Using the double declining balance method of depreciation, calculate net book value after year 1.

Explanation / Answer

Double decline:

Depreciation=1/n=1/4=25%

since it is double decline it is 25%*2=50%

Depreciation for 1st year=212,000*50%=$106,000

Net book value after year 1=212000-106000=$106,000

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On 1/1, a company buys equipment with a cost of $21200, an estimated salvage val

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