What are losses before disposal of an asset?

Thomas Enterprises purchased a depreciable asset on October 1, 2007 at a cost of $100,000. The asset is expect?

• Thomas Enterprises purchased a depreciable asset on October 1, 2007 at a cost of $100,000. The asset is expected to have a salvage value of $15,000 at the end of its five-year useful life. If the asset is depreciated on the double-declining-balance method, the asset's book value on December 31, 2009 will be: A $27,540 B $21,600 C $32,400 D $18,360 E $90,000

• Answer:

  A. $27,540 100,000 Asset Value 15,000 Salvage Value 85,000 Depreciable Basis 85,000 / 5years = 20% per year Double declining = 40% per year Year 1 = 85,000 * 40% = 34,000 Year 2 = 51,000 * 40% = 20,400 Year 3 = 30,600 * 40% = 12,240 (only 3 months = $3060)