10-24-2009, 12:12 PM
Sorry if this is in the wrong place... I'm brand new here.
I am a student in Financial Accounting and ran across a question I was having trouble answering about double-declining-balance depreciation.
Can the asset be depreciated down to it's residual value before the useful life is reached?
Our textbook gave us the following scenario An asset has a 6 year life and a total value of $74,700. The salvage value is $14,700. Show the depreciation each year using the DDB method. By my calculations, after 4 years, the book value is $14,756 and thus only $56 can be depreciated in year 5 and zero dollars in year 6. Is this acceptable or are there certain times like this when you cannot use DDB?
Thank you for any help you have. I could not find any examples like this online; everything just showed the final amount depreciated in the final year of use. Our book has had a ridiculous amount of typos thus far, so I just want to make sure the question is appropriate.
I am a student in Financial Accounting and ran across a question I was having trouble answering about double-declining-balance depreciation.
Can the asset be depreciated down to it's residual value before the useful life is reached?
Our textbook gave us the following scenario An asset has a 6 year life and a total value of $74,700. The salvage value is $14,700. Show the depreciation each year using the DDB method. By my calculations, after 4 years, the book value is $14,756 and thus only $56 can be depreciated in year 5 and zero dollars in year 6. Is this acceptable or are there certain times like this when you cannot use DDB?
Thank you for any help you have. I could not find any examples like this online; everything just showed the final amount depreciated in the final year of use. Our book has had a ridiculous amount of typos thus far, so I just want to make sure the question is appropriate.
