Question

A small truck is purchased for $17,000. It is expected to be of use to the company for 6 years, after which it will
be sold for $3,500. For each of the following cases, determine the depreciation deduction and the resulting book
value during each year of the truck’s life:
a) Use straight-line depreciation.
b) Use declining balance depreciation with a rate of 125% of the straight-line depreciation rate.
c) Use declining balance depreciation with a rate of 150% of the straight-line depreciation rate.
d) Use double declining balance depreciation.
For declining balance and double declining balance, make sure that computed book values intersect with the
estimated salvage value.

Answer 1

a)

Year	Beginning Book Value	Depreciation Percent	Depreciation Amount	Accumulated Depreciation Amount	Ending Book Value
1.	$17,000.00	16.67%	$2,250.00	$2,250.00	$14,750.00
2.	$14,750.00	16.67%	$2,250.00	$4,500.00	$12,500.00
3.	$12,500.00	16.67%	$2,250.00	$6,750.00	$10,250.00
4.	$10,250.00	16.67%	$2,250.00	$9,000.00	$8,000.00
5.	$8,000.00	16.67%	$2,250.00	$11,250.00	$5,750.00
6.	$5,750.00	16.67%	$2,250.00	$13,500.00	$3,500.00

b)

Year	Beginning Book Value	Depreciation Percent	Depreciation Amount	Accumulated Depreciation Amount	Ending Book Value
1.	$17,000.00	20.83%	$3,541.67	$3,541.67	$13,458.33
2.	$13,458.33	20.83%	$2,803.82	$6,345.49	$10,654.51
3.	$10,654.51	20.83%	$2,219.69	$8,565.18	$8,434.82
4.	$8,434.82	20.83%	$1,757.25	$10,322.43	$6,677.57
5.	$6,677.57	20.83%	$1,391.16	$11,713.59	$5,286.41
6.	$5,286.41	33.79%	$1,786.41	$13,500.00	$3,500.00

c)

Year	Beginning Book Value	Depreciation Percent	Depreciation Amount	Accumulated Depreciation Amount	Ending Book Value
1.	$17,000.00	25.00%	$4,250.00	$4,250.00	$12,750.00
2.	$12,750.00	25.00%	$3,187.50	$7,437.50	$9,562.50
3.	$9,562.50	25.00%	$2,390.63	$9,828.13	$7,171.87
4.	$7,171.87	25.00%	$1,792.97	$11,621.10	$5,378.90
5.	$5,378.90	25.00%	$1,344.73	$12,965.83	$4,034.17
6.	$4,034.17	13.24%	$534.17	$13,500.00	$3,500.00

d)

Year	Beginning Book Value	Depreciation Percent	Depreciation Amount	Accumulated Depreciation Amount	Ending Book Value
1.	$17,000.00	33.33%	$5,666.67	$5,666.67	$11,333.33
2.	$11,333.33	33.33%	$3,777.78	$9,444.45	$7,555.55
3.	$7,555.55	33.33%	$2,518.52	$11,962.97	$5,037.03
4.	$5,037.03	30.51%	$1,537.03	$13,500.00	$3,500.00
5.	$3,500.00	0.00%	$0.00	$13,500.00	$3,500.00
6.	$3,500.00	0.00%	$0.00	$13,500.00	$3,500.00