Wildhorse Co. acquires a delivery truck at a cost of $77,000. The truck is expected to...

Wildhorse Co. acquires a delivery truck at a cost of $77,000. The truck is expected to have a salvage value of $8,000 at the end of its 5-year useful life. Assuming the declining-balance depreciation rate is double the straight-line rate, compute annual depreciation for the first and second years under the declining-balance method.

Expert Solution

Working

A	Cost	$ 77,000.00
B	Residual Value	$ 8,000.00
C=A - B	Depreciable base	$ 69,000.00
D	Life [in years]	5
E=C/D	Annual SLM depreciation	$ 13,800.00
F=E/C	SLM Rate	20.00%
G=F x 2	DDB Rate	40.00%

Year	Beginning Book Value	Depreciation rate	Depreciation expense	Ending Book Value	Accumulated Depreciation
1	$ 77,000.00	40.00%	*$ 30,800.00*	$ 46,200.00	$ 30,800.00
2	$ 46,200.00	40.00%	*$ 18,480.00*	$ 27,720.00	$ 49,280.00

Requirements

Year #1 Depreciation = $ 30,800
Year #2 Depreciation = $ 18,480

ekkarill92 answered 2 years ago

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