Question

A building acquired at the beginning of the year at a cost of $86,800 has an estimated residual value of $5,200 and an estimated useful life of four years. Determine the following.

(a) The double-declining-balance rate fill in the blank 1 of 2
%
(b) The double-declining-balance depreciation for the first year fill in the blank 2 of 2$

Answer 1

To calculate the double-declining-balance depreciation, you can follow these steps:

### (a) Calculate the double-declining-balance rate

1. **Determine the straight-line depreciation rate**:
\[
\text{Straight-line rate} = \frac{100\%}{\text{Useful Life}}
\]
Here, the useful life is 4 years.
\[
\text{Straight-line rate} = \frac{100\%}{4} = 25\%
\]

2. **Calculate the double-declining-balance rate**:
\[
\text{Double-declining-balance rate} = 2 \times \text{Straight-line rate}
\]
\[
\text{Double-declining-balance rate} = 2 \times 25\% = 50\%
\]

So, the answer for (a) is **50%**.

### (b) Calculate the double-declining-balance depreciation for the first year

1. **Apply the double-declining-balance method**:
- The cost of the building is $86,800.
- The double-declining-balance depreciation for the first year is calculated as follows:
\[
\text{First Year Depreciation} = \text{Cost} \times \text{Double-declining-balance rate}
\]
\[
\text{First Year Depreciation} = 86,800 \times 50\% = 43,400
\]

So, the answer for (b) is **$43,400**.

### Final Answers:
(a) 50%
(b) $43,400