Question

halcrow yolles purchased equipment for new highway construction in manitoba canada costing 550000. estimated salvage value at the end of the expected life of 5 years is 50000. various accectable deprecition methods are being studied currently. determine the book value for year 2 according to the DDb method

Answer 1

Answer:

150,000

Explanation:

Cost of equipment = 550,000

Estimated salvage value = 50,000

Useful life = 5 Years

Straight line method yearly depreciation charge = (550000 - 50000)/5

                                                                                = 500000/5

                                                                                = 100000

Using the DDb method, Yearly depreciation = 2 × 100000

                                                                          = 200000

Book value for year 1 = 550000 - 200000

                                    = 350000

Book value for year  2 = 350000 - 200000

                                     = 150000

Book value for year 2 = 150,000