Sheffield Company purchased a new van for floral deliveries on January 1, 2020. The van cost $68000 with an estimated li...
Sheffield Company purchased a new van for floral deliveries on January 1, 2020. The van cost $68000 with an estimated life of 5 years and $15000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the balance of the Accumulated Depreciation account at the end of 2021?
Homework Answers
Double declining depreciation rate = 2 x 1/Useful life
= 2 x 1/5
= 40%
Depreciation expense for year 2020 = Cost of van x Double declining depreciation rate
= 68,000 x 40%
= $27,200
Book value of van at the beginning of 2021 = Cost of van - Depreciation expense for 2020
= 68,000 - 27,200
= $40,800
Depreciation expense for year 2021 = Book value of van at the beginning of 2021 x Double declining depreciation rate
= 40,800 x 40%
= $16,320
Accumulated depreciation at the end of 2021 = Depreciation expense for year 2020 + Depreciation expense for year 2021
= 27,200 + 16,320
= $43,520
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