Compute the declining-balance depreciation schedule for the situations in Examples 11-2 and 11-3 $(\$ in thousands)$ :

Cost of the asset, B $\$900$
Declining-balance rate $40\%$

Salvage value, S $\$70$

Question

Compute the declining-balance depreciation schedule for the situations in Examples 11-2 and 11-3 [latex](\$ in thousands)[/latex]:

Cost of the asset, B [latex]\$900 [/latex]
Declining-balance rate [latex] 40\%[/latex]

Salvage value, S [latex] \$70 [/latex]

Accepted Answer

Year, t	Depreciation for Year t from Equation 11-4a [latex]\left( \$000 \right),d_{t}[/latex]	Sum of Depreciation Charges Up to Year t [latex]\left( \$000\right),\sum_{i=1}^{t}d_{i}[/latex]	Book Value at End of Year t [latex]\left( \$000 \right),BV_{t}=B-\sum_{i=1}^{t}d_{i}[/latex]
1	[latex]40\% × 900 = 360[/latex]	[latex]\$360[/latex]	900 - 360 = 540
2	[latex]40\% × 540 = 216[/latex]	576	900 - 576 = 324
3	[latex]40\% × 324 = 130 [/latex]	706	900 - 706 = 194
4	[latex]40\% × 194 = 078 [/latex]	784	900 - 784 = 116
5	[latex]40\% × 116 = 046[/latex]	830	900 - 830 = 70

[latex]d_{n}=DB\left( 1-D \right)^{n-1}=D×BV_{n-1}[/latex] (11-4a)

Figure 11-5 illustrates the situation.

The final salvage value of [latex]\$70[/latex] for Examples 11-2, 11-3, and 11-4 was chosen to match the ending value for the DDB method. This does not normally happen.

Year, t	Depreciation for Year t from Equation 11-4a $\left( \$000 \right),d_{t}$	Sum of Depreciation Charges Up to Year t $\left( \$000\right),\sum_{i=1}^{t}d_{i}$	Book Value at End of Year t $\left( \$000 \right),BV_{t}=B-\sum_{i=1}^{t}d_{i}$
1	$40\% × 900 = 360$	$\$360$	900 – 360 = 540
2	$40\% × 540 = 216$	576	900 – 576 = 324
3	$40\% × 324 = 130$	706	900 – 706 = 194
4	$40\% × 194 = 078$	784	900 – 784 = 116
5	$40\% × 116 = 046$	830	900 – 830 = 70

Question 11.4: Compute the declining-balance depreciation schedule for the ...

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