FSA - Double-Declining Depcreciation
CFA Vol 3, Reading 25, Problem 16
Straight-Line Depreciation = (Asset Cost-Salvage Value)/ Expected Life of Asset
The solution to problem 16 states: ‘residual value is not subtracted from the initial book value to calculate depcreciation. However, the book value (carrying amount) of the asset will not be reduced below the estimated residual value.
My question is why isn’t residual value subtracted for double-depreciation as it is for single-line depr? I’m not asking for anything super in-depth, just something that makes a little sense.
Thanks in advance,
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