Wexford Co.purchased a new delivery truck at the beginning of 2016.The truck has a cost of $37,000, an estimated life of 5 years, and an estimated residual value of $7,000.A full year's depreciation expense is to be recorded in 2016.The truck was driven 20,000 miles during 2016 and 24,000 miles during 2017.The number of expected miles over five years is 100,000.

-Refer to information about Wexford Co.
Wexford Co.wants to use the depreciation method that will result in the highest depreciation expense for 2016.Which method should be used?

Question

Wexford Co.purchased a new delivery truck at the beginning of 2016.The truck has a cost of $37,000, an estimated life of 5 years, and an estimated residual value of $7,000.A full year's depreciation expense is to be recorded in 2016.The truck was driven 20,000 miles during 2016 and 24,000 miles during 2017.The number of expected miles over five years is 100,000.
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-Refer to information about Wexford Co. ​
Wexford Co.wants to use the depreciation method that will result in the highest depreciation expense for 2016.Which method should be used?

Quizplus · Accepted Answer

The double-declining-balance method results in higher depreciation expense in the earlier years of an asset's life, which is what Wexford Co. wants for 2016.