Question

A truck costs $9,200 with a residual value of $1,000. it is estimated that the useful life of the truck is four years. the amount of depreciation expense in year 2 using the declining-balance method at twice the straight-line rate is:

Answer 1

Given that the cost of the truck costs $9,200 with a residual value of $1,000. The depreciation is given by cost less residual value.

Thus, the depreciation value for the cost is $9,200 - $1,000 = $8,200

Given that the useful life of the truck is 4 years, thus the depreciation rate for the truck using straight line method is 25%.

Given that the declining balance rate is twice the straight line rate, thus the declining balance rate is 50%.

The 1st year depreciation value is given by: 0.5(9,200) = $4,600

The 2nd year depreciation value is given by: 0.5(4,600) = $2,300

Thus, the depreciation expence for year 2 is given by $2,300.