Question

Brief Exercise 229 Iverson Company purchased a delivery truck for $45,000 on January 1, 2020. The truck was assigned an estimated useful life of 5 years and has a residual value of $10,000. Compute depreciation expense using the double-declining-balance method for the years 2020 and 2021.

Answer 1

the depreciation expense using the double-declining-balance method for the years 2020 and 2021 is $18,000 and $10,800 respectively

Step-by-step explanation:

The computation of the depreciation expense using the double declining method for the year 2020 and 2021 is as follows:

For 2020

= (Cost) × depreciation rate

= $45,000 × 1 ÷ 5 × 2

= $18,000

For 2021

= ($45,000 - $18,000) × 0.40

= $10,800

hence, the depreciation expense using the double-declining-balance method for the years 2020 and 2021 is $18,000 and $10,800 respectively