Chippawa Industries acquired a delivery truck on January 4,2010.The total cost of the truck was $145,000.Chippawa estimated that the truck would be used for 8 years before being sold for an estimated $23,500.Chippawa uses the double-declining balance method of depreciation.The total depreciation expense for the year ended December 31,2010 was:

Question

Quizplus · Accepted Answer

The double-declining balance method calculates depreciation by doubling the straight-line rate. The straight-line rate is 1/8 = 12.5%, so the double-declining rate is 25%. The first year's depreciation is 25% of $145,000, which is $36,250.

Chippawa Industries Acquired a Delivery Truck on January 4,2010