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The cost of an asset is $10,000,000 and its residual value is $100,000. Estimated useful life of the asset is four years. Prepare the schedule of depreciation using the double-declining-balance method of accounting.

Respuesta :

Answer:

The book  value at the end of the fourth year is $625,000

Explanation:

The question is to prepare a schedule of depreciation through the double-declining balance method

First, we determine the rate of depreciation as follows

useful life is 4 years, therefore 100%/4 = 25%.

Since we are using double declining method = 25% x2 = 50%

The second step is to prepare the schedule

Beginning    Depreciation    Depreciation      Accumulated     Book Value    

Book Value     Rate                  Expense            Depreciation

10,000,000    50%                5,000,000           5,000,000        5,000,000

5,000,000     50%                 2,500,000           7,500,000        2,500,000

2500,000      50%                 1,250,000            8,750,000        1,250,000

1,250,000      50%                  625,000              9,375,000          625,000

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