   Chapter 5A, Problem 3SEB

Chapter
Section
Textbook Problem

DOUBLE-DECLININGBALANCE DEPRECIATION Using the information given in Exercise 5 Apx-1B, 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 beginning book value for the second year:

Book value during the beginning of the second year  }=(Book value during the beginning of the first year   )( Depreciation expense during 1st year)=$5,000$2,000=$3,000 (2) Calculate the beginning book value for the third year: Book value during the beginning of the third year }=(Book value during the beginning of the second year )( Depreciation expense during 2 nd year)=$3,000$1,200=$1,800

(3) Calculate the beginning book value for the fourth year:

Book value during the beginning of the fourth year  }=(Book value during

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