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Activity in Double Declining Balance Depreciation

A new machine was purchased for $900,000 in January 2009 with an estimated salvage value of $100,000 and useful life of 10 years. Depreciation was calculated using the double declining balance method at a rate of 20% per year. In 2009, depreciation expense was $180,000, reducing the book value to $720,000. In 2010, depreciation expense was $144,000, reducing the book value further to $576,000.

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Tet Gomez
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1K views2 pages

Activity in Double Declining Balance Depreciation

A new machine was purchased for $900,000 in January 2009 with an estimated salvage value of $100,000 and useful life of 10 years. Depreciation was calculated using the double declining balance method at a rate of 20% per year. In 2009, depreciation expense was $180,000, reducing the book value to $720,000. In 2010, depreciation expense was $144,000, reducing the book value further to $576,000.

Uploaded by

Tet Gomez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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On 2009 January 2, a new machine was acquired for $ 900,000.

The machine has an estimated salvage value of $ 100,000 an


using double declining method

Depreciation Formula

Computation:
Depreciation Rate Dep. Rate = 100%/Estimated Useful Life
100%/10years = 10%x2=20%

Double Declining Balance Depreciation

Year 1 Year 2 Year 3 Year 4


Beginning Book Value $900,000 $720,000 $576,000 $460,800
Depreciation Expense $180,000 $144,000 $155,200 $360,800
Ending Book $720,000 $576,000 $460,800 $100,000

Assumptions
Useful Life (years) 10
Salvage Value 10,000
Regular Depreciation Rate 20%
ed salvage value of $ 100,000 and an estimated useful life of 10 years.useful life. Compute depreciation for 2009 and 2010

Double Declining Balance Depreciation

Beginning Depreciation Accumulated Ending Book


Year Book Value Dep. Rate Expense Dep
2-Jan-09 $900,000 20% $180,000 $180,000 $720,000
$720,000 20% $144,000 $324,000 $576,000
$576,000 20% $115,200 $439,200 $460,800
$460,800 20% $92,160 $531,360 $368,640
$368,640 20% $73,728.0 $605,088 $294,912
$294,912 20% $58,982.40 $664,070 $235,929.60
$235,930 20% $47,186 $711,256 $188,744

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