For assets such as machines, whose market values drop rapidly in the early years of of usage, businesses often use the double declining-balance method. In practice, a business firm normally employs the double declining- balance method for depreciating such assets for a certain number of years and then switches over to the linear method. The double-declining formula isV(n) = C(1-(2/n))^nwhere C is the initial value of the assest in dollars, V(n) denotes the book value of the assets at the end of n years, and N is the number of years over which the asset is depreciatedA tractor purchased at a cost of \$40,000is to depreciated by the double declining balance method over 10 years .(a) What is the book value of the tractor at the end of 3 years?(b) What is the relative rate of change of the book value of the tractor at the end of 3 years?

Question
Asked Nov 12, 2019
1 views

For assets such as machines, whose market values drop rapidly in the early years of of usage, businesses often use the double declining-balance method. In practice, a business firm normally employs the double declining- balance method for depreciating such assets for a certain number of years and then switches over to the linear method. The double-declining formula is

V(n) = C(1-(2/n))^n

where C is the initial value of the assest in dollars, V(n) denotes the book value of the assets at the end of n years, and N is the number of years over which the asset is depreciated

A tractor purchased at a cost of \$40,000is to depreciated by the double declining balance method over 10 years .

(a) What is the book value of the tractor at the end of 3 years?

(b) What is the relative rate of change of the book value of the tractor at the end of 3 years?

check_circle

Expert Answer

Step 1

Given:

For assets such as machines, whose market values drop rapidly in the early years of of usage, businesses often use the double declining-balance method. In practice, a business firm normally employs the double declining- balance method for depreciating such assets for a certain number of years and then switches over to the linear method. The double-declining formula is

Step 2

Where C is the initial value of the assets in dollars, V(n) denotes the book value of the assets at the end of n years, and N is the number of years over which the asset is depreciated.

A tractor purchased at a cost of \$40,000is to depreciated by the double declining balance method over 10 years.

Step 3

Calculating the value of the book value of the...

Want to see the full answer?

See Solution

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in