A forklift is purchased for $17,000. The truck is expected to be of use to the company for 6 years, after which it will be sold for $3,500. Calculate the depreciation charge and book value for each when a double declining balance (DDB) method is used.

The depreciation charges and book value for each year are as follows:

Year        Depreciation charges ($)      End year book value ($)

  1                            5,668                                      11,332

  2                            3,778                                      7,554

  3                            2,519                                       5,036

  4                             1,679                                       3,357

  5                              1,119                                       2,238

  6                           (1,262)                                      3,500

Explanation:

Note: See the attached excel file for the calculation of depreciation charge and book value for each of the 6 years assuming double-declining balance (DDB) method.

A double-declining-balance refers to a depreciation method that depreciates an asset twice the rate of the straight line depreciation method.

In the attached excel file, the depreciation rate used is calculated as follows:

Straight line depreciation rate = 1 / Number of years of operating

activities = 1 / 6 = 0.1667, or 16.67%

Double-declining depreciation rate = Straight line depreciation rate * 2

= 16.67% * 2 = 33.34%

The 33.34% double-declining depreciation rate is therefore used in the attached excel file table.

Note:

The depreciation charge is negative, i.e. -$1,262, the residual value of $3,500 which is greater than the beginning book value in Year 6 of $2,238 has to be considered. Therefore, the Year 6 depreciation expenses is calculated as follows:

Year 6 depreciation expenses = Beginning book value in Year 6 - Residual value = $2,238 - $3,500 = -$1,262

A decrease in price leads to a decrease in supply.

-An increase in price leads to an increase in supply.

As the price of a product fall down, the amount of profit that the sellers would get for selling the product would also fall. This would cause them to decrease the amount of supply so they can produce more profitable happen. The exact opposite happen when the price of the product rises.

Explanation:

the statements that are true according to the law of supply are: -A decrease in price leads to a decrease in supply. -An increase in price leads to an increase in supply. Increase in price encourage producer to sell more because it make them gain more profit, which lead in the increase in supply.