QUICK ONE! A truck costing $80,000 has an expected life of 8 years

Required:

c) Prepare a depreciation schedule using the reducing balance method? (assuming the rate is 1.5 times the straight-line rate)

Rate is 1.5 times the straight line depreciation rate which is;

=

= $10,000 per year

Rate = * 100%

=12.5%

Reducing balance rate = 12.5% * 1.5

= 18.75%

The Depreciation Schedule would be;

Year  Beginning Book Value  Depreciation Expense  Accumulated Depreciation  Book Value

1  $80,000  80,000*18.75% = $15,000  $15,000  $65,000

2  $65,000  65,000 * 18.75% = $12,1875.50  $27,187.50  $52,812.50

3  $52,812.50  52,812.5 *18.75% = $9,902.34  $37,187.84  $42,910.16

4  $42,910.16  42,910.16 * 18.75% = $8,045.66  $45,233.50  $34,766.50

5  $34,766.50  34,766.50 * 0.1875 = 6,518.72  $51,752.22  $28,247.78

6  $28,247.78  28,247.78 * 0.1875= $5,296.45  $57,048.67  $22,951.33

7  $22,951.33  22,951.33 * 0.1875= 4,403.37  $61,452.04  $18,547.96

8  $18,547.96  18,547.96 * 0.1875 = $3,477.74    $80,000  $0

   $3,477.74 + 15,070.22= $18,574.96      

Depreciation for the last year was not sufficient to take the truck to $0 so the remainder will be depreciated in that year so that it may be completely depreciated.

answer; microeconomics;