Verify the 5- and 7-year property class percentages byapplying the 200% DB approach to a piece of equipmentwith a nominal value of $1,000. For the 7-year propertyclass, in what year is the switch from 200% DB to StraightLine? Only half of the first and last years are considered inthe computations. This means that for a 5-year class property,instead of deducting 100% × (2/5) = 40% in the firstyear, only half (40%/2 = 20%) is deducted.
Verify the 5- and 7-year property class percentages byapplying the 200% DB approach to a piece of equipmentwith a nominal value of $1,000. For the 7-year propertyclass, in what year is the switch from 200% DB to StraightLine? Only half of the first and last years are considered inthe computations. This means that for a 5-year class property,instead of deducting 100% × (2/5) = 40% in the firstyear, only half (40%/2 = 20%) is deducted.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Verify the 5- and 7-year property class percentages by
applying the 200% DB approach to a piece of equipment
with a nominal value of $1,000. For the 7-year property
class, in what year is the switch from 200% DB to Straight
Line? Only half of the first and last years are considered in
the computations. This means that for a 5-year class property,
instead of deducting 100% × (2/5) = 40% in the first
year, only half (40%/2 = 20%) is deducted.
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