The Chuck Company purchased a truck on January 1, 2014. The truck cost $106,000 and was expected to have a residual value of $14,000 at the end of 2018. Chuck uses the 150%-declining-balance depreciation method. What amount of depreciation should Chuck record on the truck in 2014?

Question

Quizplus · Accepted Answer

To calculate depreciation using the 150% declining balance method, we first calculate the straight-line depreciation rate: 
(1/5) = 0.2 
Then we multiply this rate by 1.5 to get the double-declining balance rate: 
0.2 x 1.5 = 0.3 
In the first year, we apply this rate to the full cost of the truck: 
$106,000 x 0.3 = $31,800 
Therefore, Chuck should record $31,800 of depreciation on the truck in 2014.

The Chuck Company Purchased a Truck on January 1, 2014