Pop Quiz Question

Question: your business just bought a car in 2009 for 60,000 dollars.
What is your straight line depreciation rate?
What is the book value for all five years?
what is your single declining balance?
what is your book value for single declining Balance?

Answer:

Year straight line depreciation Book Value Single Declining Balance Book Value


2009 60,000/5 = 12,000 60,000-12,000 = 48,000 1/5 * 60,000 = 12,000 60,000-12,000 = 48,000
2010 60,000/5 = 12,000 48,000-12,000 = 36,000 1/5 * 48,000 = 9600 48,000-9600 = 38400
2011 60,000/5 = 12,000 36,000- 12,000 = 24,000 1/5 * 38400 = 7680 38400-7680 = 30720
2012 60,000/5 = 12,000 24,000- 12,000 = 12,000 1/5 * 30720 = 6144 30720- 6144 = 24576
2013 60,000/5 = 12,000 12,000-12,000 = 0 1/5 * 24576 = 4915.2 24576- 4915.2 = 19660.8

Cost Basis = 60,000
years = 5

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