Question

On January 1, 2017, X-it Company bought a new delivery truck for $30,000. X-it plans to use the truck for 4 years, after which it will be sold for $6,000. Depreciation expense for 2019, the third year of use, using double-declining-balance equals ______.

Answer 1

Depreciation expense for 2019, the third year of use, using double-declining-balance can be calculated by following these steps: Calculate the straight-line depreciation rate, multiply it by 2 to get the double-declining-balance rate, apply the rate to the remaining book value of the truck, and multiply the rate by the remaining book value for 2019 to get the depreciation expense. $7,500.

Step-by-step explanation:

Depreciation expense for 2019, the third year of use, using double-declining-balance can be calculated as follows:

Step 1: Calculate the straight-line depreciation rate by dividing 1 by the useful life of the truck. In this case, the useful life is 4 years, so the straight-line depreciation rate is 1/4 = 0.25.

Step 2: Multiply the straight-line depreciation rate by 2 to get the double-declining-balance rate. In this case, the double-declining-balance rate is 0.25 * 2 = 0.5.

Step 3: Apply the double-declining-balance rate to the remaining book value of the truck for 2019. The remaining book value for 2019 can be calculated as follows: Initial cost - Accumulated depreciation for the first two years = $30,000 - (2 * (1/4) * $30,000) = $30,000 - $15,000 = $15,000.

Step 4: Multiply the double-declining-balance rate by the remaining book value for 2019 to get the depreciation expense for that year. In this case, the depreciation expense for 2019 is 0.5 * $15,000 = $7,500.