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On January 1, 2014, Flowers Unlimited purchased a new delivery van.The van cost $35,000 with an estimated life of 5 years and $5,000 residual value.Double diminishing-balance depreciation will be used.
-What is the balance in the Accumulated Depreciation account at the end of 2015?
A)$22,400
B)$19,200
C)$12,600
D)$10,800

Question

Use the following information for questions 
On January 1, 2014, Flowers Unlimited purchased a new delivery van.The van cost $35,000 with an estimated life of 5 years and $5,000 residual value.Double diminishing-balance depreciation will be used.
-What is the balance in the Accumulated Depreciation account at the end of 2015?
A)$22,400
B)$19,200
C)$12,600
D)$10,800

Quizplus · Accepted Answer

Double-declining-balance depreciation is twice the straight-line rate. The straight-line rate is (cost - residual value) / life = (35,000 - 5,000) / 5 = 6,000 per year. The double-declining-balance rate is 2 * 6,000 = 12,000 per year. The depreciation expense for 2014 is 12,000 * 35,000 / 100 = 4,200. The book value at the end of 2014 is 35,000 - 4,200 = 30,800. The depreciation expense for 2015 is 12,000 * 30,800 / 100 = 3,696. The balance in the Accumulated Depreciation account at the end of 2015 is 4,200 + 3,696 = 7,896.

Use the Following Information for Questions