On January 1, Year 1, Missouri Company purchased a truck that cost $57,000. The truck had an expected useful life of 10 years and a $6,000 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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The double declining-balance method of depreciation involves doubling the straight-line rate of depreciation. The straight-line rate for a 10-year useful life is 10%, so the double declining rate is 20%. In the first year, depreciation is calculated on the initial cost: $57,000 * 20% = $11,400. This reduces the book value to $45,600 ($57,000 - $11,400). In Year 2, the same 20% rate is applied to the new book value: $45,600 * 20% = $9,120.

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