Thomas Enterprises purchased a depreciable asset on October 1,Year 1 at a cost of $100,000.The asset is expected to have a salvage value of $15,000 at the end of its five-year useful life.If the asset is depreciated on the double-declining-balance method,the asset's book value on December 31,Year 3 will be:

Question

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Period BOY BV DB Rate Depreciation Expense EOY BV
Year 1 100,000 40% $40,000 * 3/12 = $10,000 $90,000
Year 2 90,000 40% 36,000 54,000
Year 3 54,000 40% 21,600 32,400
Accordingly, the asset's book value at the end of Year 3 would be $32,400.
BOY BV = Beginning of Year Book Value
DB Rate = Declining Balance Rate of Depreciation (100%/5 * 2)
EOY BV = End of Year Book Value

Thomas Enterprises Purchased a Depreciable Asset on October 1,Year 1