QUESTION 4 Partially correct 1.00 points out of 3.00P Flag question Depreciation
ID: 2546051 • Letter: Q
Question
QUESTION 4 Partially correct 1.00 points out of 3.00P Flag question Depreciation Methods A delivery truck costing $26.000 is expected to have a $1.500 salvage value at the end of ts useful life of four years or 125,000 miles. Assume that the truck was purchased on January 2. Calculate the depreciation expense for the second year using each of the following depreciation methods: (a) straight-line. (b) double-declining balance, and (c) units-of-production. (Assume that the truck was a. Straight-line b. Double-declining balance 9360 c. Units-of-production 6,125Explanation / Answer
Double Declining Depreciation Method
Year
Book Value Begining
Double Declining Depreciation = 2 x SL Depreciation Rate x Book Value Begining
Net Book Value End
1
$ 26000
$ 13000
$ 13000
2
$ 13000
$ 6500
$ 6500
3
$ 6500
$ 3250
$ 3250
4
$ 3250
$ 1750
$ 1500
Stright Line Depreciation rate = 1/4 = 25%
Double Under Declining Depreciation Method Year Two = $ 6500
Unites of Production method
Depreciation for the period
= ( Cost – Residual value ) x Output of current period/Total Output
= ( $ 26000 - $ 1500 ) * 28000 / 125000 Miles
= $ 24500 * 28000 / 125000
Depreciation = $ 5488
Year
Book Value Begining
Double Declining Depreciation = 2 x SL Depreciation Rate x Book Value Begining
Net Book Value End
1
$ 26000
$ 13000
$ 13000
2
$ 13000
$ 6500
$ 6500
3
$ 6500
$ 3250
$ 3250
4
$ 3250
$ 1750
$ 1500