Find the first year's depreciation, using the double-declining-balance method. Round to the nearest dollar.
-Cost: $1,550
Est. life: 20 years
Est. scrap: $155

Question

Quizplus · Accepted Answer

The double-declining-balance method calculates depreciation at twice the straight-line rate. Straight-line depreciation would be (Cost - Scrap) / Life = ($1,550 - $155) / 20 = $69.75 per year. Double that rate is $139.50, which rounds to $140. However, the correct calculation for the first year using the double-declining balance method should actually be 2/20 (or 10%) of the initial cost, which is 10% of $1,550 = $155.

Find the First Year's Depreciation, Using the Double-Declining-Balance Method