Cambridge Company purchased a truck on January 1, 2018. Cambridge paid $15,000 for the truck. The truck is expected to have a $3,500 residual value and a 5-year life. Cambridge has a December 31 fiscal year end. Using the double-declining balance method, how much is the 2019 depreciation expense? (Enter only whole dollar values.) Hint: what is the year 2 depreciation amount?

Question

Mathematics

Miya

2 March, 03:04

Cambridge Company purchased a truck on January 1, 2018. Cambridge paid $15,000 for the truck. The truck is expected to have a $3,500 residual value and a 5-year life. Cambridge has a December 31 fiscal year end. Using the double-declining balance method, how much is the 2019 depreciation expense? (Enter only whole dollar values.) Hint: what is the year 2 depreciation amount?

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Davin Finley · Answer 1

Using the double-declining balance method, Deprecjation expense in 2019 is = $3,536.

Step-by-step explanation:

Purchase price of truck = $15,000

Residual value = $3,500

Useful life = 5 years

Rate of Straight line depreciation method = 100%/5 = 20%

Rate of double declining balance depreciation method = 2 * Rate of Straight line depreciation method

= 2*20% = 40%

Depreciation on 31st December, 2018 = $15,000*40% = $6,160

Depreciation on 31st December, 2019 = ($15,000 - $6,160) * 40%

= $8,840*40%

= $3,536