Question

On January 1, 2018, 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 using double-declining-balance equals ______.

Answer 1

The depreciation expense for 2018 using the double-declining-balance method for X-it Company's new truck is $12,000.

Step-by-step explanation:

The depreciation expense for the first year using the double-declining-balance method for the new delivery truck purchased by X-it Company can be calculated as follows:

First, determine the straight-line depreciation rate, which would be 1 divided by the useful life of the asset. In this case, since the truck has a 4-year useful life, the straight-line depreciation rate is 1/4 or 25%.

For the double-declining-balance method, this rate is doubled, so the depreciation rate for the first year would be 25% * 2, which is 50%.

Next, apply this rate to the truck's cost minus any salvage value. Since the cost is $30,000 and the salvage value is $6,000, the depreciable base is $30,000 - $6,000 = $24,000.

The depreciation expense for 2018 is then 50% of $24,000, which equals to $12,000.