Farr Company purchased a new van for floral deliveries on January 1, 2014. The van cost €48,000 with an estimated life of 5 years and €12,000 residual value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the balance of the Accumulated Depreciation account at the end of 2015?

Question

Quizplus · Accepted Answer

First, we need to calculate the depreciation expense for the van. The double-declining-balance method applies a depreciation rate that is twice the straight-line rate, which means the depreciation rate for this van is 40% (2/5 times 100%).

- Year 1 depreciation: €48,000 x 40% = €19,200
- Year 2 depreciation: (€48,000 - €19,200) x 40% = €11,520

The accumulated depreciation at the end of Year 2 would be the sum of the depreciation expenses for both years:

Accumulated depreciation, end of Year 2 = €19,200 + €11,520 = €30,720

Therefore, the correct choice is C.

Farr Company Purchased a New Van for Floral Deliveries on January