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21 February, 12:27

On January 1, 2021, the Excel Delivery Company purchased a delivery van for $111,000. At the end of its five-year service life, it is estimated that the van will be worth $11,400. During the five-year period, the company expects to drive the van 332,000 miles. Required: Calculate annual depreciation for the five-year life of the van using each of the following methods. double declining balance

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  1. 21 February, 13:20
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    Annual depreciation = $44,400

    Explanation:

    Given,

    Purchase price of the delivery van = $111,000

    Salvage value = $11,400

    Useful Life = 5 years

    We know that

    annual depreciation under double declining balance (%) = (100%/useful life) * 2

    Putting the value in the formula, Annual depreciation (%) = (100%/5) * 2

    = 40%

    Annual depreciation = Purchase Price*Percentage of annual depreciation

    Annual depreciation = $111,000*40% = $44,400
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