Fantasy Cruise Lines

On January 1, 2019 the company purchased a ship for $1,000,000. It has a 10-year useful life and a residual value of $100,000. The company uses the double-declining-balance method.
-Refer to Fantasy Cruise Lines. What will be the book value of the ship at the end of its useful life?

Question

Fantasy Cruise Lines
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On January 1, 2019 the company purchased a ship for $1,000,000. It has a 10-year useful life and a residual value of $100,000. The company uses the double-declining-balance method.
-Refer to Fantasy Cruise Lines. What will be the book value of the ship at the end of its useful life?

Quizplus · Accepted Answer

The depreciation each year can be calculated as follows:

Year 1: ($1,000,000 - $100,000) x 2/10 = $180,000
Year 2: ($820,000 - $100,000) x 2/10 = $144,000
Year 3: ($676,000 - $100,000) x 2/10 = $115,200
Year 4: ($560,800 - $100,000) x 2/10 = $96,160
Year 5: ($464,640 - $100,000) x 2/10 = $78,528
Year 6: ($386,168 - $100,000) x 2/10 = $63,634.40
Year 7: ($322,534.40 - $100,000) x 2/10 = $52,506.88
Year 8: ($270,031.52 - $100,000) x 2/10 = $44,006.30
Year 9: ($226,025.82 - $100,000) x 2/10 = $36,405.13
Year 10: ($189,430.69 - $100,000) x 2/10 = $29,486.14

Therefore, the book value of the ship at the end of its useful life will be $100,000.

Fantasy Cruise Lines ​

Fantasy Cruise Lines