Dorchester Company purchased a new van for floral deliveries on July 1, 2021. The van cost $ 20,000 with an estimated life of 5 years and $ 5,000 residual value at the end of its useful life. The double diminishing-balance method of depreciation will be used. What is the depreciation expense for 2021?

Question

Quizplus · Accepted Answer

The double diminishing-balance method of depreciation results in a depreciation expense of 40% of the book value in the first year. The book value in the first year is $20,000, so the depreciation expense for 2021 is $20,000 x 40% = $8,000.

Dorchester Company Purchased a New Van for Floral Deliveries on July