A truck is purchased for $35,000.It has a five-year life and a $5,000 residual value.Under the double-declining-balance method,what is the accumulated depreciation after two years?

Question

Quizplus · Accepted Answer

Under the double-declining-balance method, the depreciation rate is twice as the straight-line method. Therefore, the depreciation rate for the truck is 40% (100%/5 years x 2 = 40%).

In the first year, the depreciation expense would be $14,000 (40% x $35,000). The book value of the truck at the end of the first year would be $21,000 ($35,000 - $14,000).

In the second year, the depreciation expense is calculated as 40% of the book value at the beginning of the year, which is $8,400 (40% x $21,000). The accumulated depreciation after two years would be the sum of the depreciation expenses for the two years, which is $14,000 + $8,400 = $22,400. Therefore, the answer is C).

A Truck Is Purchased for $35,000