DDBM: A property that is book-depreciated over a 10-year period by the Double Declining Balance Method has $14,680

Accounting Aug 06, 2020

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).

Expert Solution

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

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