Depreciation: Declining Balance

Concept: Double Declining Balance (DDB) Depreciation

8m

Example: Double Declining Balance (DDB) Depreciation

13m

Problem: ABC Company purchased a new machine on January 1, Year 1 for $44,000. The company expects the machine to last ten years. The company thinks it could sell the scrap metal from the machine for $4,000 at the end of its useful life. If the company uses the double-declining method for depreciation, what will be the net book value of the machine on December 31, Year 2?

6m

Problem: DBQ Company purchased a machine on January 1, Year 1 for $60,000. The company estimated a five year useful life and $8,000 residual value. If the company uses the double-declining-balance method for depreciation, what will be the amount of accumulated depreciation on December 31, Year 2?

4m

Problem: XYZ Company purchased a machine on January 1, 2018 for $120,000. The company estimated a four year useful life and $4,000 residual value. If the company uses the double-declining-balance method for depreciation, what will be the amount of depreciation expense for the year 2021?

5m

Depreciation: Declining Balance Additional Practice Problems

On January 1, 2004, ABC Company purchased equipment for $100,000. The equipment was assigned a life of 20 years and a $4,000 residual value. On January 1, 2007, ABC Company spent $34,600 to overhaul the equipment. This capital expenditure caused ABC Company to change the life of the equipment from 20 years to 28 years with a residual value at the end of the 28 years of $2,000.

Assuming ABC Company employs the double-declining balance depreciation method, calculate the book value of the equipment at December 31, 2008.

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XYZ Company purchased a new machine on January 1, 2002 for $80,000. The machine was assigned a 5-year life and a $12,000 residual value.

Calculate the amount of  depreciation expense recorded on the machine in  2005 assuming the company uses the double declining balance depreciation method.

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XYZ Company purchased a new machine on January 1, 2002 for $80,000. The machine was assigned a 5-year life and a $12,000 residual value.

Calculate the book value of the machine at December 31, 2004  assuming the company uses the double declining balance  depreciation method.

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On January 2, 2003, Kedri Kemper purchased a new truck for $20,000. The estimated life of the equipment is 5 years or 100,000 miles. The estimated residual value is $1,000. What is the book value of the equipment on December 31, 2004 if Kedri uses the double-declining balance method of depreciation?

a. $4,800

b. $7,200

c. $12,000

d. $12,800

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Williams Company plans to depreciate a new building using double-declining- balance depreciation. The building cost $700,000. The estimated residual value of the building is $25,000 and it has an expected useful life of 4 years. What is the building’s book value at the end of the second year?

a. $175,000.

b. $362,500.

c. $168,750.

d. $77,778.

e. None of the above is correct.

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A company purchased a POS cash register on January 1 for $5,400. This register has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second-year of its useful life using the double-declining-balance method?

a. $ 500.

b. $ 800.

c. $ 864.

d. $1,000.

e. $1,080.

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