Depreciation basics

Front

Why do we depreciate assets?

Back

They decline in value over time, they become obsolete over time, and wear and tear makes them less valuable.

Front

What is one advantage of the double declining balance method?

Back

More of the depreciation happens early in the asset's life

Front

What is one advantage of the straight line method?

Back

Depreciation is consistent

Front

Using the straight line method, what will Jo-Jo's first year depreciation be for a machine purchased at $8,700 with a residual value of $700 and a useful life of 5 years?

Back

$1,600

Front

Using the double declining balance method, what will Jo-Jo's first year depreciation be for a machine purchased for $8,700 with a residual value of $700 and a useful life of 5 years?

Back

$3,200

Front

Using the straight line method, what will Jo-Jo's second year depreciation be for a machine purchased at $8,700 with a residual value of $700 and a useful life of 5 years?

Back

$1,600

Front

Using the double declining balance method, what will Jo-Jo's second year depreciation be for a machine purchased at $8,700 with a residual value of $700 and a useful life of 5 years?

Back

$1,920

Front

Using the straight line method, what is the depreciation in the 3rd year for a widget making machine bought for $500,000 with a residual value of $50,000 and a useful life of 15 years?

Back

$30,000

Front

Using the double declining value method, what is the depreciation in the 2nd year for a widget making machine bought for $500,000 with a residual value of $50,000 and a useful life of 15 years?

Back

$36,000