Question

A delivery van that cost $40,000 has an expected service life of eight years and a residual value of $4,000. Depreciation expense for the second year of the asset's life using the double-declining-balance method is:

Answer 1

Answer:

$7,500

Explanation:

Calculation for the Depreciation of rah second year of the asset's life

Second year depreciation=(1/8 years*2)*[($40,000)-(1/8 years*2* $40,000)]

Second year depreciation=(0.25)*[($40,000)-(0.25*$40,000)]

Second year depreciation=(0.25)*[($40,000-$10,000)]

Second year depreciation=0.25*$30,000

Second year depreciation=$7,500

Therefore the Depreciation of rah second year of the asset's life using the double-declining-balance method is: $7,500