Engineering Board Exam Reviewer · Depreciation: Declining Balance and Sum-of-Years-Digit Methods · hard

A machine costs P200,000 with a salvage value of P20,000 and a life of 5 years. Using the declining balance method, find the depreciation rate.

  1. ≈36.9%
  2. ≈20.0%
  3. ≈40.0%
  4. ≈45.0%

Answer

A. ≈36.9%

Solution

r=1-≤ft( Salvage Cost )1/n=1-≤ft(20000/200000 )1/5=1-(0.1)0.2 36.9%.

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