Question

On January 1, 2015, 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 2018, the fourth year of use, using double-declining-balance equals ______.

Answer 1

To calculate the depreciation expense using the double-declining-balance method, divide 1 by the useful life of the asset and multiply by 2. Then, multiply the depreciation rate by the book value of the asset at the beginning of the year.

Step-by-step explanation:

To calculate the depreciation expense using the double-declining-balance method, you need to first calculate the depreciation rate. The depreciation rate is 1 divided by the useful life of the asset, multiplied by 2. In this case, the useful life of the truck is 4 years, so the depreciation rate is 1/4 * 2 = 0.5.

Next, you multiply the depreciation rate by the book value of the asset at the beginning of the year. The book value is the original cost minus accumulated depreciation. In this case, the book value at the beginning of 2018 is $30,000 - ($0 + $10,000 + $10,000) = $10,000.

So, the depreciation expense for 2018 is $10,000 * 0.5 = $5,000.