A company purchases an asset on April'05. The acquisition cost of the asset is $90000 and the expected life is 5 years. The residual value at the end of its useful life is $20000. Calculate the amount of depreciation for 2005, 2006, 2007 using the double

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... using the double declining balance depreciation method.

  • $28200, $27200, $17350
  • $27500, $25000, $16210
  • $26000, $25200, $16100
  • $27000, $25200, $15120

The double declining balance depreciation method is one of two common methods a business uses to account for the expense of a long-lived asset. The double declining balance depreciation method is an accelerated depreciation method that counts twice as much of the asset’s book value each year as an expense compared to straight-line depreciation. The formula is:

Depreciation for a period = 2 x straight-line depreciation percent x book value at beginning of period.

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90000 - 20000 = 70000
70000 / 5 = 14000
14000 / 70000 = 0.2
0.2 * 2 = 0.4

90000 * 0.4 = 36000
36000 * 0.75 = 27000 (первый год)