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On January 1, 2010, Run & Go Pizza purchased a delivery truck for $50,000. The truck has a $5,000 salvage value and a four-year (or 56,250 miles) useful life. During 2010, the company put 15,750 miles on the delivery truck.
-If Run & Go uses the double-declining balance method, how much depreciation expense should Run & Go recognize in 2010?

Question

Use the following information to answer questions 
On January 1, 2010, Run & Go Pizza purchased a delivery truck for $50,000. The truck has a $5,000 salvage value and a four-year (or 56,250 miles) useful life. During 2010, the company put 15,750 miles on the delivery truck.
-If Run & Go uses the double-declining balance method, how much depreciation expense should Run & Go recognize in 2010?

Quizplus · Accepted Answer

The double-declining balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/4 (25%) since the useful life is 4 years. Double that rate is 50%. The first year's depreciation is 50% of the truck's cost: $50,000 * 50% = $25,000.

Use the Following Information to Answer Questions