Wen's Export Co. Wen's Export Co.purchased a new delivery truck at the beginning of 2013.The truck has a cost of $37,000,an estimated life of 5 years,and an estimated residual value of $7,000.A full year's depreciation expense is to be recorded in 2013.The truck was driven 20,000 miles during 2013 and 24,000 miles during 2014.The number of expected miles over five years is 100,000.
Refer to information for Wen's Export Co.
What is the amount by which double-declining-balance depreciation exceeds straight-line depreciation over the 5-year life of the truck?

Question

Quizplus · Accepted Answer

Since the truck has an estimated residual value of $7,000, the company cannot use double-declining-balance depreciation since it would depreciate the truck below its residual value. Therefore, straight-line depreciation will provide the same amount of depreciation expense over the 5-year life of the truck, and there is no difference to calculate.