Will Do NV just purchased some equipment at a cost of €650,000.What is the proper methodology for computing the depreciation expense for year 3 if the equipment is depreciated using 20%
Reducing balances?

Question

Quizplus · Accepted Answer

The correct method for calculating the depreciation expense for year 3 using the reducing balance method at a rate of 20% involves calculating the book value at the end of year 2 and then applying the 20% depreciation rate to this value. The formula in option E correctly represents this process: the initial cost is reduced by 20% for the first year, then again by 20% for the second year, and finally, 20% of the remaining balance is taken as the depreciation expense for the third year.

Will Do NV Just Purchased Some Equipment at a Cost