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Declining Balance 150% Depreciation

The company purchased a machine for $15,000 plus additional costs of $1,200. It used the machine for 5 years then sold it for $1,000. The document explains and provides examples of calculations for 4 different depreciation methods - straight line, declining balance, sum of years digits, and 150% declining balance - that can be used to calculate the depreciation and book value each year over the 5 year period.

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114 views2 pages

Declining Balance 150% Depreciation

The company purchased a machine for $15,000 plus additional costs of $1,200. It used the machine for 5 years then sold it for $1,000. The document explains and provides examples of calculations for 4 different depreciation methods - straight line, declining balance, sum of years digits, and 150% declining balance - that can be used to calculate the depreciation and book value each year over the 5 year period.

Uploaded by

Green Stone
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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PF

dn  (1) A company purchased a machine for $15,000. It paid sales tax


N installation costs amounting to $1,200. At the end of five years,
it was sold for $1,000.
Dn  nd n
BVn  P  Dn
Year
Straight Line Method 1
P 17200 2
F 1000 3
N 5 4
5
dN 3240

Declining Method Double 2


k
N
k 0.4
F
k  1 N Year
P 1
BVn  P (1  k ) n 2
3
d n  kBVn 1  kP(1  k ) n 1 4
Dn  P  BVn 5

Declining Method 150% k=1.5/N

k 0.3 Year
1
2
3
4
5

Sum of the Years Method


Year
 2( N  n  1) 
d n  ( P  f )  1
 N( N  1)  2
3
 ( 2N  n  1)n 
D n  ( P  F )  4
 N( N  1)  5

BVn  P  D n
or $15,000. It paid sales tax and shipping costs of $1,000 and nonrecurring
0. At the end of five years, the company had no further use for the machine,

BVn
dn Dn 17200 Total
3240 3240 13960 17200
3240 6480 10720 17200
3240 9720 7480 17200
3240 12960 4240 17200
3240 16200 1000 17200

dn Dn BVn Total
6880.00 6880.00 10320.00 17200
4128.00 11008.00 6192.00 17200
2476.80 13484.80 3715.20 17200
1486.08 14970.88 2229.12 17200
891.65 15862.53 1337.47 17200

dn Dn BVn Total
5160.00 5160.00 12040.00 17200
3612.00 8772.00 8428.00 17200
2528.40 11300.40 5899.60 17200
1769.88 13070.28 4129.72 17200
1238.92 14309.20 2890.80 17200

dn Dn BVn Total
5400.00 5400.00 11800.00 17200
4320.00 9720.00 7480.00 17200
3240.00 12960.00 4240.00 17200
2160.00 15120.00 2080.00 17200
1080.00 16200.00 1000.00 17200

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