[loststudent]

Please help with this problem I can not seem to get it right.

BJM bought a truck for $100,000, its useful life is 5 years and an estimated salvage rate of $25,000. Calculate the declining dep expense and net book value for the 5 years.

Strait-line dep rate= 1/5=20% Double dep rate = 40%

dep exp net book value
2003 100,000*0.4= 40,000 $60,000
2004 60,000*0.4= 24,000 $36,000
2005 36,000*0.4= 14,400 $21,600
2006 21,600*0.4= 8,600 $12,900
2007 12,900*0.4= 5,184 $7,776

I thought that the dep exp should =$75,000 and the net book value should =$25,000 but I can not get it to add up correctly. I did get it for the straight line method and the sum of the digit year methods. :confused:

[pready]

Year 3 Depreciation Expense will be $11,000 to reach the Salvage Value of $25,000
Year 4 & 5 Depreciation Expense will be $0

Note: Once you reach the Salvage value you do not take out any more Depreciation.