Bing's Export Co.
Bing's Export Co.purchased a new delivery truck at the beginning of 2015.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 2015.The truck was driven 20,000 miles during 2015 and 24,000 miles during 2016.The number of expected miles over five years is 100,000.
-Refer to information about Bing's Export Co.
Bing's Export Co.wants to use the depreciation method that will result in the highest depreciation expense for 2015.Which method should be used?

Question

Quizplus · Accepted Answer

The double-declining-balance method is an accelerated depreciation method, which means it will result in a higher depreciation expense in the early years of the asset's life. This method is best used when an asset is expected to be more productive in its earlier years, which is likely the case with a new delivery truck. Therefore, the double-declining-balance method will result in the highest depreciation expense for 2015.

Bing's Export Co. Bing's Export Co.purchased a New Delivery Truck at the Beginning