Double Declining Balance Question

Australia Discussion in 'Exams and Studying' started by marenello, May 23, 2014.

  1. marenello

    marenello

    Joined:
    May 23, 2014
    Messages:
    1
    Likes Received:
    0
    So undertaking a bit of part time post grad study and basically a bit confused with the double-declining depreciation method.

    I've looked around at examples, but haven't been able to find a suitable answer.

    My question is for a given useful life of an asset to be depreciated, does the ending book value have to equal to residual value?

    In all the examples I've seen, I understand you can't depreciate past book value, so in the final years, the depreciation is less than what the equation states, or even zero. I understand that scenario.

    But how about if you don't actually reach book value (through the equation) during the useful life? In class, it was shown that you *can* simply, allocate a larger amount for the final year to reach the residual value, or alternatively, smooth out this amount over the final few years. However this seems to contradict with the examples I've seen online?

    Anyone care to weigh in? Can provide an actual number example if required, but was hoping to not have to insert a table.
     
    marenello, May 23, 2014
    #1
    1. Advertisements

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments (here). After that, you can post your question and our members will help you out.