Lesson ProgressPhase 5 of 6
Phase 5Assessment
Assessment: Double-Declining Balance and Method Comparison
Short MCQ exit ticket on DDB calculation and method comparison reasoning
Exit Ticket: DDB and Method Comparison
Sarah is comparing both depreciation methods before deciding which one to use for TechStart's asset register. Test your understanding with these questions.
What This Checks
- • Calculating DDB depreciation expense
- • Applying the salvage value floor rule
- • Comparing DDB and straight-line in business terms
- • Understanding when to choose each method
DDB Formula
DDB Rate = 2 × (1 ÷ Useful Life)
Expense = Beginning Book Value × DDB Rate
Floor Rule
If expense would push book value below salvage value, reduce expense so book value equals salvage value exactly.
DDB and Method Comparison Assessment
Demonstrate your understanding of double-declining balance calculation and method comparison
1. A $40,000 machine has a 4-year life and $4,000 salvage value. What is the Year 1 DDB depreciation expense?
2. Why does DDB produce higher depreciation expense than straight-line in early years?
3. A $20,000 asset with 5-year life and $2,000 salvage value. In Year 4, DDB calculation gives $2,592 expense but book value would fall to $1,908. What should the expense be?
4. Which type of asset is most likely to use DDB depreciation?
5. If a company switches from straight-line to DDB, what happens to Year 1 net income?
6. What is the DDB rate for an asset with an 8-year useful life?
0 of 6 questions answered