Question

Cambridge Company purchased a truck on January 1, 2018. Cambridge paid $23,000 for the truck. The truck is expected to have a $3,500 residual value and a 5-year life. Cambridge has a December 31 fiscal year end. Using the double-declining balance method, how much is the 2019 depreciation expense? (Enter only whole dollar values.) Hint: what is the year 2 depreciation amount?

Answer 1

Depreciation for 2019= $ 5,520

Working

Double declining Method
	Cost	$ 23,000
B	Residual Value	$ 3,500
C=A - B	Depreciable base	$ 19,500
D	Life [in years]	5
E=C/D	Annual SLM depreciation	$ 3,900
F=E/C	SLM Rate	20.00%
G=F x 2	DDB Rate	40.00%

.

Depreciation schedule-Double declining
Year	Beginning Book Value	Depreciation rate	Depreciation expense	Accumulated Depreciation	Ending Book Value
2018	$ 23,000	40.00%	$ 9,200	$ 9,200	$ 13,800
2019	$ 13,800	40.00%	$ 5,520	$ 14,720	$ 8,280