Question

On January 1, 2012, AB Ltd buys a truck for $42,000 cash. It has estimated residual value of $2,000, and an estimated lie of 4 years, or 200,000 miles. The truck drove 40,000 miles in 2012, 60,000 miles in 2013, 80,000 miles in 2014, and 20,000 miles in 2015. Assuming the company uses the Double-declining balance method of depreciation complete the following table and show your computation/workings for the figures shown as the annual depreciation expense. Asset cost, depreciation expense, accumulated depreciation and net book value.

Answer 1

Solution:

Depreciation rate - SLM = 1/4 = 25%

Depreciaton rate DDB = 25%*2 = 50%

Depreciation Schedule - Double Declining Balance Method
Date	Asset Cost	Book Value	Depreciation Rate (25%*2)	Depreciation Expense for the year	Accumulated Depreciation	Ending Book Value
Purchase Date	$42,000
1		$42,000	50%	$21,000	$21,000	$21,000
2		$21,000	50%	$10,500	$31,500	$10,500
3		$10,500	50%	$5,250	$36,750	$5,250
4		$5,250		$3,250	$40,000	$2,000
Total				$40,000