Marlow Company purchased a point of sale system on January 1 for $3,400. This sy
ID: 2500497 • Letter: M
Question
Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the book value of the asset at the end of the first year of its useful life using the double-declining-balance method? Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the book value of the asset at the end of the first year of its useful life using the double-declining-balance method?Explanation / Answer
As per double declining balance method, Assets are charged at higher rate during initial years of purhcase as compared to rest of years.
From the information provided, Useful life of Asset is 10 Years with salavage value of $400.
Depreciation to be charged = ($3400-$400)*2/10
= $600
Therefore book value of Asset = $3400-$600
= $2800
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