   Chapter 5A, Problem 3SEA

Chapter
Section
Textbook Problem

DOUBLE-DECLINING-BALANCE DEPRECIATION Using the information given in Exercise 5Apx-l A, prepare a depreciation schedule showing the depreciation expense, accumulated depreciation, and book value for each year under the double-declining-balance method.

To determine

Prepare a depreciation schedule showing the depreciation expense, accumulated depreciation, and book value for each year under the double-declining balance method.

Explanation

Double-declining balance method (Accelerated method):

In this method of depreciation, the diminishing value of the asset is taken into consideration for determining the depreciation for the succeeding years.

Prepare a depreciation schedule showing the depreciation expense, accumulated depreciation, and book value for each year under the double-declining balance method.

(Figure 1)

Excel workings:

(Figure 2)

Working Notes:

(1) Calculate the Depreciation expense for the third year:

Depreciation expense  =(Book value at the beginning of the 3rd year)Salvage value =$6,250$5,000=\$1,250

(2) Calculate the beginning book value for the third year:

Book value during the beginning of the  third year  }=( Depreciation expense during 2nd year)( Depreciation expense <

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