Perhaps I’ve been studying too much… A machine is purchased for $3000 and has an estimated useful life of five years. Its salvage value is estimated to be $500 after five years of use. What is year 3 depreciation expense using DDB method? A) $360 B) 432 C) 500 D) 720 The answer is B but I thought once salvage value is reached, depreciation expense was not further recorded. Is this just a bad question? (Stalla, Q2 SS 9).
Well, the depreciation expense is 432…but the residual book value (RBV) is 648 so you have not reached the 500 savage value.
I got answer B Book value beginning of Y1 is 3000 Depr expense Y1 is 1200 Book value beginning of Y2 is 3000-1200 Depr expense Y2 is 720 Book value beginning Y3 is 1080 Depr expsens Y3 is 432 Book value beginning Y4 is 648 > 500 salvage value >>>> Answer B correct
Boy, I don’t know how I am getting confused on such a straight forward problem. Ironic–I can do quant with the best of them but that DDB just gets me.
learn to use the Depreciation function on the TI BA II Plus calc… makes these problems a breeze
i love the depreciation worksheet. 5 minutes of learning it has saved me hours in calculations
dspapo- i am just stuck on SL what should i punch on my calculator to get DDB please help
2nd enter will allow you to scroll thro’ the various type options. cp
i love the depreciation worksheet. 5 minutes of learning it has saved me hours in calculations ------->> where is this worksheet??
2nd - DEPR (which is the 4 key on the BaII)
THANK YOU THANK YOU THANK YOU!!! You just saved a WORLD of frustrations for me!!! I mean, I completely understand the concept but kept getting so damn confused on the simple set up. THANK YOU AGAIN!!!
Kellyfio, Apart from obvious differences between the DDM and the SL method, in the DDM you do not substract the residual value, in the SL you do it. hope helps.