Foyle Company purchased a new van for floral deliveries on January 1, 2013. The van cost $48,000 with an estimated life of 5 years and $12,000 salvage 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 2014?

Question

Quizplus · Accepted Answer

The double-declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/5 = 20%, so double is 40%. For 2013: $48,000 * 40% = $19,200. For 2014: ($48,000 - $19,200) * 40% = $11,520. Total accumulated depreciation by end of 2014 is $19,200 + $11,520 = $30,720.

Foyle Company Purchased a New Van for Floral Deliveries on January