ap Leaming Objective 2 SolutionDoble declining method is dif

Solution

Doble declining method is different from straight line method. Under the double declining balance method, double means twice or 200% of the straight line depreciation rate.

When using Double declining method, do not subtract salvage value when calculating depreciation.

In this question SLM rate is 100%/10 years = 10% per year

In DDB, rate becomes double i.e. 20% per year.

Cost = $108,000

Rate = 20%

1st year = $108,000*20% = $21,600

2nd year = ($108,000-$21,600)*20% = $17,280

Answer is $21,600 & $17,280 in 1st and 2nd year.