Joe Wong, owner of Cookie Palace, is discussing with his accountant which method of depreciation would be best for his new delivery truck. The cost of the truck is $20,000 with an estimated life of four years. The residual value of the truck is $2,500. Prepare a depreciation schedule using the declining-balance method at twice the straight-line rate.

Question

Quizplus · Accepted Answer

Depr Exp 1 = .5 × $20,000 = $10,000;
Acc Dep 1 = 0 + $10,000 = $10,000;
Book Value 1 = $20,000 - $10,000 = $10,000;
Acc Depr 2 = $10,000;
Book Value BOY 2 = $10,000;
Depr Exp 2 = $10,000 × .5 = $5,000;
Acc Depr EOY 2 = $10,000 + $5,000 = $15,000;
Book Value EOY 2 = $10,000 - $5,000 = $5,000;
Acc Depr 3 = $10,000 + $5,000 = $15,000;
Book Value BOY 3 = $5,000;
Depr Exp 3 = $5,000 × .5 = $2,500;
Acc Depr EOY 3 = $2,500 + $5,000 + $10,000 = $17,500;
Book Value EOY 3 = $5,000 - $2,500 = $2,500.

Joe Wong, Owner of Cookie Palace, Is Discussing with His