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Homework answers / question archive / DDBM: A property that is book-depreciated over a 10-year period by the Double Declining Balance Method has $14,680
DDBM: A property that is book-depreciated over a 10-year period by the Double Declining Balance Method has $14,680.06 book value on the 7th year. Determine the first cost of the property (round-off k to 4 decimal places).
Answer: First cost of property is $69,9999.9809
Calculations:
Deprecation rate = (1/10 years) x 2 = 0.10 x 2 = 0.20 or 20%
Beginning book value = Ending book value ÷ (100%-20%)
Beginning book value = Ending book value ÷ 80%
| Ending book value | Beginning book value [Ending book value ÷ 80%] |
|
| 7th year | $14,680.0600 | $18,350.0750 |
| 6th year | $18,350.0750 | $22,937.5938 |
| 5th year | $22,937.5938 | $28,671.9922 |
| 4th year | $28,671.9922 | $35,839.9902 |
| 3rd year | $35,839.9902 | $44,799.9878 |
| 2nd year | $44,799.9878 | $55,999.9847 |
| 1st year | $55,999.9847 | $69,999.9809 |
