akbkarma
Jun 1, 2009, 04:04 PM
A company uses the double-declining method. It acquires a long lived asset for $200,000 and assigns a $20,000 salvage to it. How much of its cost will be allocated to 2009 assuming the asset was placed in service 7/01/08 and has a 5 year life?
I got that the Declining Rate is 40 %, since the asset was placed in service on 7/1/08, the total allocated would be $33,333.35 for 2008. $200,000 - $33,333.35 = $166,666.65. 40% of $166,666.65 is $66,666.67. So the answer would be $66,666.67 would be allocated to 2009? Can someone please help me and tell me if this is correct, if not can you please explain to me what I did wrong. Thank you in advance. This book is horrible and doesn't explain much.
I got that the Declining Rate is 40 %, since the asset was placed in service on 7/1/08, the total allocated would be $33,333.35 for 2008. $200,000 - $33,333.35 = $166,666.65. 40% of $166,666.65 is $66,666.67. So the answer would be $66,666.67 would be allocated to 2009? Can someone please help me and tell me if this is correct, if not can you please explain to me what I did wrong. Thank you in advance. This book is horrible and doesn't explain much.