Question

halcrow yolles purchased equipment for new highway construction in manitoba canada costing 550000. estimated salvage value at the end of the expected life of 5 years is 50000. various accectable deprecition methods are being studied currently. determine the book value for year 2 according to the DDb method

Answer 1

150,000

Step-by-step explanation:

Cost of equipment = 550,000

Estimated salvage value = 50,000

Useful life = 5 Years

Straight line method yearly depreciation charge = (550000 - 50000)/5

= 500000/5

= 100000

Using the DDb method, Yearly depreciation = 2 × 100000

= 200000

Book value for year 1 = 550000 - 200000

= 350000

Book value for year 2 = 350000 - 200000

= 150000

Book value for year 2 = 150,000