Answer:
Asset Cost Residual Service Life Depreciation Depreciation
Value (Years) Method (Year 2)
A $125,000 $31,000 5 DDB $30,000
B $30,000 $12,000 8 SYD $3,500
C $87,000 $6,000 9 SL $9,000
D $252,000 $21,000 10 straight line $23,100
E $211,000 $3,100 8 150%DB $32,144.53
A) double declining balance:
2 x 1/5 x 0.6cost = $30,000
0.6cost = $30,000 / 0.4 = $75,000
cost = $75,000 / 0.6 = $125,000
B) 8 + 7 + 6 + 5 +4 + 3 + 2 + 1 = 36
depreciation year 2 = 7/36 x ($30,000 - residual value) = $3,500
$30,000 - residual value = $3,500 x 36/7 = $18,000
residual value = $30,000 - $18,000 = $12,000
C) straight line depreciation per year = net depreciable value / useful life
$81,000 / useful life = $9,000
useful life = $81,000 / $9,000 = 9
D) straight line since depreciation per year x useful life = net depreciable value
$23,100 x 10 = $231,000
E) 150% double declining
year 1 = 1.5 x 1/8 x $211,000 = $39,562.50
year 2 = 1.5 x 1/8 x $171,437.50 = $32,144.53
