BTL Company purchased a tractor at a cost of $60,000. The tractor has an estimated salvage value of $10,000 and an estimated life of 8 years, or 12,000 hours of operation. The tractor was purchased on January 1, 2019 and was used 2,400 hours in 2019 and 2,100 hours in 2020.
What method of depreciation will produce the maximum depreciation expense in 2020?

Question

Quizplus · Accepted Answer

The double-declining-balance method of depreciation will produce the maximum depreciation expense in 2020 because it applies a constant rate to the declining book value of the asset each year, resulting in higher depreciation expenses in the earlier years of an asset's life compared to the straight-line and units-of-production methods.

BTL Company Purchased a Tractor at a Cost of $60,000