Discussion
For that asset the first year's double declining balance charge is
Answer: D
Correct answer: 20 000
The rate is applied to the book value at the start of the year, which in the first year is the full first cost: \[ 0.40 \times 50\,000 = 20\,000. \] Salvage is not deducted from the base in declining balance, which is why the method must be watched to see that it does not write the asset below salvage later on.
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