On January 1, Year 1, Friedman Company purchased a truck that cost $48,000. The truck had an expected useful life of 8 years and an $8,000 salvage value. The company uses the double-declining balance method. The book value of the truck at the end of Year 1 is:

Question

Quizplus · Accepted Answer

The double-declining balance method involves doubling the straight-line depreciation rate. The straight-line rate is 1/8 = 12.5%, so double is 25%. Depreciation for Year 1 is 25% of $48,000 = $12,000. Book value at end of Year 1 is $48,000 - $12,000 = $36,000.

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