A building acquired at the beginning of the year at a cost of $1,375,000 has an estimated residual value of $250,000 and an estimated useful life of 40 years. Determine (a) the double-declining-balance rate and (b) the double-declining-balance depreciation for the first year.
Answer:
a. 5% [(100% ÷ 40) × 2]
b. $68,750 ($1,375,000 × 5%)