Question

Double Declining Balance Depreciation A small delivery truck was purchased on January 1 at a cost of $25,000. It has an estimated useful life of four years and an estimated salvage value of $5,000. Prepare a depreciation schedule showing the depreciation expense, accumulated depreciation, and book value for each year under the Double Declining balance method Accum. depr. end of Yr. 2:$18,750

Answer 1

Under the double declining balance method, Depreciation rate is applied at opening book value of the asset at each year and the depreciation for last year or the year in which the asset reaches its residual value is the difference between the book value and the residual value if the depreciation of that year results in residual value being less than the estimated residual value

Depreciation rate under double declining balance method

= 1 / Useful life x 2

= 1 / 4 x 2

= 0.50 or 50%

The following is the depreciation schedule

Calculations	A = E of previous year	B	C = A x B	D = Cumulative C	E = A - C
Year	Beginning book value	Depreciation rate	Depreciation	Accumulated Depreciation	Closing Book value
1	25000	50%	12500	12500	12500
2	12500	50%	6250	18750	6250
3	6250	50%	1250	20000	5000
4	5000	50%	0	20000	5000