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chubhunter [2.5K]
3 years ago
10

On January 1, Year 1, Missouri Co. purchased a truck that cost $35,000. The truck had an expected useful life of 10 years and a

$3,000 salvage value. The amount of depreciation expense recognized in Year 2 assuming that Missouri uses the double declining-balance method is_____________.
a. $5,120.
b. $5,600.
c. $3,500.
d. $7,000.
Business
1 answer:
ANTONII [103]3 years ago
8 0

Answer:

B. $5600

Explanation:

Purchase price = $35,000

Expected life cycle= 10 years

Salvage value= $3000

Depreciation expense at the year 2= ?

Solution:

Using a straight line method.

Depreciation= Purchase price/expected useful life( straight line method)

Depreciation= 35,0000/10

=$3500 which is equivalent to 10% of the original price.

Using double declining-balance method, the value will double to

Depreciation expense in Year 1 = (20% of $35000) $7000

Depreciation expense in Year 2=

(20% of $28,000) $5600

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