Ball and Bats, Inc.: Double Line method and the Straight Line Method
On January 1, 2005 the company Balls and Bats, Inc. made a
purchase of equipment. The cost of the equipment was one hundred thousand dollars and had life expectancy of four years. The following schedules are the double-declining balance method and the straight line method of depreciation. This schedule will assist Balls and Bats, Inc determine the best method to depreciate there new acquisition. Further, the schedules will determine which will glean a higher net income for the organization for the year ending December 31, 2005.
Double-declining balance method (DDB)
Year 1: D= .50(100,000)
= 50,000
Year 2: D= .50(100,000- 50,000)
= .50(50,000)
= 25,000
Year 3: D= .50(100,000-50,000-25,000)
= .50(25,000)
= 12,500
Year 4 D= .50(100,000-50,000-25,000-12,500)
= .50(12,500)
= 6,250
Declining-Balance at Twice
the Straight-Line
Rate (DDB)
Annual Depreciation Book Value
At Acquisition 100,000
2005 50,000 & ...