On January 1, Year 1, Missouri Company purchased a truck that cost $47,000. The truck had an expected useful life of 10 years and a $5,000 salvage value. The amount of depreciation expense recognized in Year 2 assuming that Missouri uses the double declining-balance method is:

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Quizplus · Accepted Answer

The double declining-balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/10 = 10%, so double is 20%. Year 1 depreciation: $47,000 * 20% = $9,400. Year 2 depreciation: ($47,000 - $9,400) * 20% = $7,520.

On January 1, Year 1, Missouri Company Purchased a Truck