The Williams Company acquired an asset for $20 million. The asset has an estimated salvage value of $1 million and is being depreciated using DDB. What is the difference in depreciation on this asset in the second year if the useful life is 10 years as compared to 8 years? A) $550,000. B) $0. C) $800,000. D) $1,000,000.
A.
A
A
A
A. Though I was first contemplating to account for salvage value. 
A DDB(i) = 2/n * (cost of the asset - accum dep(till i)) Case1 -------- DDB(1) = 2/10 * (20m - 0) = 4m DDB(2) = 2/10 * (20m - 4m) = 3.2m Case2 -------- DDB(1) = 2/8 * (20m - 0) = 5m DDB(2) = 2/8 * (20m - 5m) = 3.75 Difference (year 2) = 3.75 - 3.2 = 0.55m - Dinesh S