CFA Practice Question

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CFA Practice Question

The annual depreciation expense, using the double-declining-balance method, is equal to ______.

A. twice the straight-line rate times the difference between original cost and salvage value
B. the straight-line rate times twice the book value
C. twice the straight-line rate times the net book value
Correct Answer: C

Double-declining-balance depreciation is computed by multiplying twice the straight-line rate by the asset's net book value.

User Contributed Comments 8

User Comment
kalps Twice being 2/N X (cost - acc depn) (NB salvage value is not subtracted) - wehere as it is in Straight line depn
shasha you may put it in this way: rate for straight line is "1/N", rate for DDB is "2/N".
liana Can somebody please explain to me why this answer is not wrong ? Thank u
thekobe liana, net book value doesnt consider the salvage value
johntan1979 Straight line rate = 1/N

Where N = Estimated Useful Life

DDB = 2 x 1/N x Net book value
Shaan23 Liana. Exactly my point on this question.

Dont use calculator shortcuts. Just do the example in the text and you'll know this section inside out.
davidt876 Dont be a dick Shaan23
chesschh feeling like I dont have an excuse for only reading the notes...
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