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4 September, 18:59

On January 1, Year 1, Friedman Company purchased a truck that cost $48,000. The truck had an expected useful life of 8 years and an $8,000 salvage value. The book value of the truck at the end of Year 1, assuming that Friedman uses the double-declining-balance method, is:

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  1. 4 September, 22:57
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    The answer is $36,000

    Explanation:

    First we need to determine the rate to be used.

    To determine the rate:

    100percent/8 years

    12.5%

    Double rate is 12.5% x 2

    =25%. This is the rate to be used.

    Cost of the truck is $48,000

    First year depreciation is:

    25% x $48,000

    So first year depreciation is $12,000

    Book value of the truck at the end of year 1 is $48,000 - $12,000

    =$36,000
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