A truck is purchased for $70,000.It has a five-year life and a $10,000 residual value.Under the double-declining-balance method,what is the accumulated depreciation after two years?

Question

Quizplus · Accepted Answer

The double-declining-balance method is a method of depreciation where depreciation is charged at twice the rate of straight-line depreciation. 
First, we need to find the depreciation rate per year: 
Depreciation rate = 2 / 5 = 0.4 
In the first year, the depreciation expense is: 
Depreciation expense year 1 = $70,000 x 0.4 = $28,000 
The book value at the end of year 1 is: 
Book value year 1 = $70,000 - $28,000 = $42,000 
In the second year, the depreciation expense is: 
Depreciation expense year 2 = $42,000 x 0.4 = $16,800 
The accumulated depreciation after two years is: 
Accumulated depreciation year 2 = $28,000 + $16,800 = $44,800. 
Therefore, the answer is C.

A Truck Is Purchased for $70,000