Question

ABC Delivery Company purchased a new delivery truck on January 1 with an original cost of $50,000. The company estimates it will use the truck for 5 years and drive a total of 100,000 miles. It plans to sell the truck at the end of the five years for $5,000. During the first year, the truck was driven 15,000 miles. What is the depreciation for the first year using the DoubleDeclining Balance method?

$10,000
		$18,000
		$7,500
		$20,000
		$6,750
		$9,000

Answer 1

Given,

Cost of truck = $50,000

Useful life = 5 years

So,

Depreciation rate = (1/Useful life)*100

                             = (1/5)*100

                             = 20%

Depreciation in 1^st year = Cost*Depreciation rate

                                      = $50,000*20%

                                      = $10,000