Sample Essay

The rate of depreciation for double declining method is estimated by doubling the rate of straight line method. The rate of depreciation for straight line method is calculated by using the following rate (Bragg, 2002).

Rate = Depreciation expense / depreciable cost

Rate = 30,000 / 120,000

Rate = 25%

The rate for double declining method will be 50% and the formula for double declining balance is given below.

Depreciation expense = Book Value X rate

Depreciation expense 2007 = 125,000 X 50% = \$62,500

Depreciation expense 2008 = 62,500 X 50% = \$31,250

Depreciation expense 2009 = 31,250 X 50% = \$15,625

Depreciation expense 2010 = 15,625 X 50% = \$7,812.5

 Year Cost Depreciation Expense Accumulated Depreciation Book Value 2007 125,000 62,500 62,500 62,500 2008 125,000 31,250 93,750 31,250 2009 125,000 15,625 109,375 15625 2010 125,000 7,812.5 117,187.5 7,812.5

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