[Anonymous]

A depreciable asset has an estimated 15% salvage value. Under which of the following methods, properly applied, would the accumulated depreciation equal the original cost at the end of the asset’s estimated useful life?

A. Straight-line

B. Double-declining balance

C. Both straight-line and double-declining balance

D. Neither straight-line nor double-declining balance

D. Under all of the depreciation methods, a depreciable asset is not depreciated past the point that Cost – Accumulated depreciation = Salvage value. Consequently, the maximum amount of accumulated depreciation is Cost – Salvage value. Neither straight-line nor double-declining balance would result in accumulated depreciation equal to the original cost.

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Why is the answer not B? I was taught that double-declining would have no salvage value at the end, so this answer would make sense.

[waffle_house]

Is it because after a certain point you have to use S/L to depreciate the asset?

AUD - 80
BEC - 75
FAR - 84
REG - 76

Exams started Sep 2014 -Exams done Mar 2017

Texas CPA

I put in work, it was evident

[Anonymous]

Both method will have a net book value equal to it's salvage value at the end of the useful life. Double-declining method is just ignoring the salvage value during calculation of depreciation but on the final year, depreciation expense recognized will be the difference between the net book value and the salvage value.

[Monkey Wrench]

You don't include salvage value into the calculation, BUT you do not depreciate PAST the salvage value.

[Author]

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