Final answer:
The depreciation expense for 2019 for Dow Corp.'s truck using the double declining method is $15,040. This is calculated by applying a 20% depreciation rate on the book value of the truck at the beginning of 2019, which is $75,200 after accounting for the first year's depreciation in 2018.
Step-by-step explanation:
The subject of this question is related to accounting in a business context, specifically focusing on the calculation of depreciation expense using the double declining balance method. The calculation involves determining the book value of the asset at the beginning of the year and then applying the double declining balance depreciation rate.
To calculate the depreciation expense for 2019 for Dow Corp.'s truck, we first need to determine the depreciable base, which includes the cost of the truck, the hydraulic lift, and the sales tax, but not the insurance as it is an expense, not a capital improvement. The total depreciable base is $80,000 (cost of the truck) + $10,000 (cost of hydraulic lift) + $4,000 (sales tax) = $94,000. The double declining method involves doubling the straight-line depreciation rate, which is 1 divided by the useful life of the asset. The straight-line rate for a 10-year useful life is 10%, so the double declining rate is 20%.
First-year depreciation for 2018 would be 20% of $94,000, which equates to $18,800. The book value at the beginning of 2019 is thus $94,000 - $18,800 = $75,200. The depreciation expense for 2019 is 20% of $75,200, which is $15,040.
Note that we subtract the salvage value at the end of the asset's useful life, not during annual depreciation calculations. Therefore, the depreciation expense for 2019 for the truck is $15,040.