Suppose a company purchased a fixed asset (PP&E) at a cost of $20 million. Per guidance from management, the PP&E will have a useful life of 5 years and a salvage value of $4 million. PP&E Purchase Cost = $20 million Salvage Value = $4 million Useful Life = 5 Years Calculate depreciation expense 20mm-4mm=16mm/5=3,2mm Calculate depreciation rate 3.2mm/16mm*100= 20% X2 =40% Double declining schedule BEG VALUE Dep exp Straight Depreciati Double Ending on rate Declining value year 20mm 3.2mm 40% 8MM 12MM 1 12MM