A truck costing $25,000 with a residual value of $5,000 was purchased by Rim Corporation. The truck's estimated life is 10 years. At the end of year 2 what is the book value using the declining-balance method? Assume a depreciation rate of twice the straight-line rate.

Question

Quizplus · Accepted Answer

$25,000 × .2 = $5,000; $25,000 - $5,000 = $20,000; $20,000 × .2 = $4,000; $4,000 + $5,000 = $9,000; $25,000 - $9,000 = $16,000.

A Truck Costing $25,000 with a Residual Value of $5,000