What is the Straight-line, Units of Production, and double declining balance if I were to purchase a business for $55 million dollars. I expect the business to remain useful for 10 years (1,000,000 miles) and to have a risidual value of $5 million.
I put 80,000 miles on the ship the first year and 115,000 miles the second year. How would I compute my businesse's first and second year depreciation?
Thanks for any help you can give me.

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Originally Posted by pollycat11

What is the Straight-line, Units of Production, and double declining balance if I were to purchase a business for $55 million dollars. I expect the business to remain useful for 10 years (1,000,000 miles) and to have a risidual value of $5 million.
I put 80,000 miles on the ship the first year and 115,000 miles the second year. How would I compute my businesse's first and second year depreciation?
Thanks for any help you can give me.

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the straight line method is to determine the useful life and strike a rate in this case 1/10

the units of production method requires you amortise the value by the proportion utilised
50,000,000/1,000,000*usage

the double declining method means you apply the rate chosen to a decling methodology but double the rate each year so in each year you will charge 20% of the written down balance

Thank you

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Originally Posted by paraclete

the straight line method is to determine the useful life and strike a rate in this case 1/10

the units of production method requires you amortise the value by the proportion utilised
50,000,000/1,000,000*usage

the double declining method means you apply the rate chosen to a decling methodology but double the rate each year so in each year you will charge 20% of the written down balance

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