Question

Question 32 3 pts 1 Bedroom Apartments in Marietta GA Floor Pla... Use the following infor lakesideattowncenter-apartments.com/floorplan... On January 1, our company purchased a truck for $80,000. The estimated useful life of the truck is 4 years. The residual value at the end of 4 years is estimated to be $10,000. What is the depreciation expense for the second year of use if we use the double-declining balance method? [ Select ] What is the balance in accumulated depreciation at the end of the second year of use if we use the double-declining balance method? [Select] What is the book value at the end of the second year of use if we use the double-declining balance method? [ Select]

Answer 1

Solution

Depreciation for second year = $20,000.

Accumulated depreciation balance at end of second year= $60,000

Book value at the end of second year= $20,000

Working

Double declining Method
	Cost	$ 80,000
B	Residual Value	$ 10,000
C=A - B	Depreciable base	$ 70,000
D	Life [in years]	4
E=C/D	Annual SLM depreciation	$ 17,500
F=E/C	SLM Rate	25.00%
G=F x 2	DDB Rate	50.00%

.

Depreciation schedule-Double declining
Year	Beginning Book Value	Depreciation rate	Depreciation expense	Accumulated Depreciation	Ending Book Value
1	$ 80,000	50.00%	$ 40,000	$ 40,000	$ 40,000
2	$ 40,000	50.00%	$ 20,000	$ 60,000	$ 20,000