Farr Company purchased a new van for floral deliveries on January 1, 2011.The van cost €40,000 with an estimated life of 5 years and €10,000 residual value at the end of its useful life.The double-declining-balance method of depreciation will be used.What is the depreciation expense for 2011?

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%. Double this rate to get 40%. The depreciation for 2011 is 40% of €40,000, which is €16,000.

Farr Company Purchased a New Van for Floral Deliveries on January