A new electric saw for cutting small pieces of lumber in a furniture manufacturing plant has a cost basis of $6,000 and a 10-year depreciable life. The estimated SV of the saw is zero at the end of 10 years. Use the DB method to calculate the annual depreciation amounts when:

(a) R = 2/N (200% DB method)

(b) R = 1.5/N (150% DB method)

A) book value after 10 years = $644

depreciation after 10 years = $5356

B) book value after 10 years = $1181

depreciation after 10 years = $4819

Explanation:

cost basis  =$6000

10 year depreciable life

SV after 10 years = 0

N = 10

A) Annual depreciation when R = 2/N ( 200% DB method )

year 1 : book value = $6000, R = 2/10 * 100

B) Annual depreciation when R = 1.5/N ( 150% DB method )

year 1: book value = $6000 , R = 1.5/10 * 100

attached to this is a tabular solution using the DB method  

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