Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Use Microsoft Excel to solve the question : The initial cost of an asset is BD100000. It has useful life of 9 years. The estimated

Use Microsoft Excel to solve the question :

The initial cost of an asset is BD100000. It has useful life of 9 years. The estimated salvage value of the asset at the end of useful life is zero. Calculate the annual depreciation and book value using double-declining balance method and find out the year in which the switching is done from double-declining balance method to straight-line method.

Theory related to switching

Switching between different depreciation methods:- Switching from one depreciation method to another is done to accelerate the depreciation of book value of the asset and thus to have tax benefits. Switching is generally done when depreciation amount for a given year by the currently used method is less than that by the new method. The most commonly used switch is from double-declining balance (DDB) method to straight-line (SL) method. In double-declining balance method, the book value never reaches zero. In addition the calculated book value at the end of useful life does not match with the salvage value. Switching from double-declining balance method to straight-line method ensures that the book value does not fall below the estimated salvage value of the asset.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing And Assurance Services

Authors: Louwers, Timothy Louwers

5th Edition

0078025443, 978-0078025440

Students also viewed these Accounting questions

Question

=+b) Compute the x2 statistic.

Answered: 1 week ago

Question

2 What are the steps that can aid effective communication?

Answered: 1 week ago