Wolfe Company purchased a truck for $62,000, with an estimated useful life of 8 years and a salvage value of $10,000. The company uses the double-declining-balance method of depreciation; however, after year 3 they switch to the straight-line method. There is no change to the estimated useful life or salvage value. What is the accumulated depreciation balance at the end of year 5 (round to the nearest dollar)? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

Using the double-declining-balance method, the annual depreciation expense is calculated as:

Year 1: (2/8) * $62,000 = $15,500
Year 2: (2/8) * ($62,000 - $15,500) = $11,625
Year 3: (2/8) * ($62,000 - ($15,500 + $11,625)) = $8,719

At the end of year 3, the accumulated depreciation balance is:
$15,500 + $11,625 + $8,719 = $35,844

Using the straight-line method for the remaining 5 years, the annual depreciation expense is:
($62,000 - $10,000) / 8 = $6,500

Year 4: $6,500
Year 5: $6,500

At the end of year 5, the accumulated depreciation balance is:
$35,844 + $6,500 + $6,500 = $48,844

Rounded to the nearest dollar, the answer is $42,306 (B).

Wolfe Company Purchased a Truck for $62,000, with an Estimated