Double Declining Depreciation

Ireland Discussion in 'Exams and Studying' started by JackTC, Dec 15, 2018.

  1. JackTC

    JackTC

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    Depreciation expense for the vehicles has not been recognized. The useful life of the vehicles is 8 years with a salvage value of €100. Double Declining Balance Depreciation is applied to vehicles and rounded to the nearest €.

    • Vehicles €7200

    • Accum Depreciation Vehicles €824
    Tutors Answer is (7200 - 824)*0.25 = 1594



    Where is the 0.25 coming from?
     
    JackTC, Dec 15, 2018
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  2. JackTC

    bklynboy VIP Member

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    • TakE the 7,200 asset value and subtracting the 100 salvage value, to get 7100 subject to depreciation. Under the straight-line method, you would take 7100 and divide it by the number of years the asset is in service, or 8 years. Depreciation expense would ben 887 each year.
    • Take the 887 SL depreciation expense and figure out what it is as a percentage of the total amount subject to depreciation, which is 7100 in this case and, you'll arrive at 0.125, or 12.5 percent.
    • Now, for the 200 percent method, multiply by 2 to get to 25 percent. If you had been using the 150 percent double declining depreciation method, you would multiply by 1.5.
     
    bklynboy, Dec 15, 2018
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    Manish45 likes this.
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