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&aring;‰&macr;&aelig;œ&not;DDB

# &aring;‰&macr;&aelig;œ&not;DDB - 1,563...

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Double declining balance Cost C 41,000 Residual Value R 1,000 Life (years) n 4 Straight line rate = 1/n = 0.25 DDB rate = 2*SL rate 0.5 DDB depreciation = DDB rate * Book Value DDB ignores residual value in the calculation of deprecitaion. This schedule ignores residual value. You must make sure you do not depreciate the asset such that book value is less than residual value. End of Year Book Value Beginning Depreciation Accumulated minus Book Value Expense Depreciation Residual Value Year 1 41,000 20,500 20,500 19,500 Year 2 20,500 10,250 30,750 9,250 Year 3 10,250 5,125 35,875 4,125 Year 4 5,125 2,563 38,438
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Unformatted text preview: 1,563 If this column is Change the numbers in the yellow cells to see what happens. Change to 2 or 3 negative you may years. Can you calculate the same numbers? Raise the residual value so one of the not take the full numbers in the green column becomes negative. If that happens you must limit the depreciation for depreciation to a number that would leave the book value equal to the residual value. that year. For example, if RV = 5,000 when n = 4 and Cost = 41,000, then the 4th year depreciation is limited to 125. After that, BV = RV = 5,000....
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