accounting queston 1
Accounting

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i am stuck on the last part of this problem. year 5. every number i have come up comes up wrong. 3369.60,3369,3370. please help. here is a pic of the problem
http://imgur.com/KpWMMYt
For straight line depreciation, basically you have to divide the depreciable amount with the useful life. The depreciable amount is equal to purchase price minus the salvage value. Here's the solution:
Annual depreciation = ($65,000  $5,000) / 5 years
= $60,000 / 5 years
= $ 12,000
For double declining balance depreciation, you have to get the percentage that will be used for the annual depreciation. The formula would be 1 / useful life * 2. So our percentage would be to 1/5*2 = 40%. Then to get the annual depreciation, you have to multiply this percentage to the carrying amount of the asset. The carrying amount is equal to cost minus accumulated deprecation. Here's the solution.
Year 1: $65,000 * 40% = $26,000
Year 2: $65,000  $26,000 = $39,000 * 40% = $15,600
Year 3: $39,000  $15,600 = $23,400 * 40% = $9,360
Year 4: $23,400  $9,360 = $14,040 * 40% = $5,616
Year 5: $14,040  $5,616  $5,000 = $3,424
Please note that in year 5, you have to simply deduct the salvage value with the remaining carrying amount to get the depreciation.
Hope this had helped you.
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