Double Declining Balance - Schweser 16B Example

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MarkMoney

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On Pg 43 in section 16.B, there is a question about the effects of depreciation methods on net income.
I was able to do most of the question without any issues. However, I’m stuck on the double declining balance method for year 3 -5. Why does the depreciation expense drop from $132k to $49.3k in year 3 and stick with that for the next two years?
I was under the impression that depreciation in year 3 would be (2 x BV year 2) / Number of years. Wouldn’t this be (2 x 198k) / 5 = $79.2k depreciation in year 3?
Is this a mistake in Schweser or am I totally missing something??
Thanks in advance!
-Mark
 
1. did you know you could calculate this on your calculator too?
2. provide details of the question - so you can be helped.
 
Sorry, I probably should have added initially. I forgot that Charterholders would also be around the forums and helping us out.
“Sackkett Laboratories purchases chemical processing machinery for $550,000. The equipment has an estimated useful life of five years and an estimated salvage value of $50,000.”
My question is regarding the depreciation over the five years for the double declining balance methodolgy. The answers I get are:
$220k, $132k, $79.2k, $47.5k, $21.3k, but the book shows $220k, $132k, $49.3k, $49.3k, $49.3k.
Thanks in advance for your help!
 
MarkMoney wrote:Is this a mistake in Schweser or am I totally missing something??
Click to expand...
You’re totally missing something:
“(b) the double declinign balance method, changing to the straight-line method after two years”
 
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