Question

Sheridan Chemicals Company acquires a delivery truck at a cost of $39
truck is expected to have a salvage value of $2,300 at the end of its 4.
declining-balance depreciation rate is double the straight-line rate
first and second years under the declining-balance method.
st of $39,900 on January 1, 2022. The
nd of its 4-year useful life. Assuming the
ant-line rate, compute annual depreciation for the
First Yon

Answer 1

Answer:

First year= $19950

Second year= $9975

Step-by-step explanation:

Depreciation rate as per straight line method=(100/5)=20%/year

Depreciation as per double decline balance=2*Depreciation rate as per straight line method*Beginning value of each period

1st year

Beginning value=$39,900

Depreciation=(2*25%*$39900)=$19950

Ending value= ($39900-$19950)=$19950

2nd year

Beginning value=$19950

Depreciation=(2*25%*$19950)=$9975

Ending value= ($19950-$9975)=$9975

Annual depreciation

First year= $19950

Second year= $9975