Shaggy Limited purchased a new van on January 1, 2011. The van cost $42,000. It

Question

Shaggy Limited purchased a new van on January 1, 2011. The van cost $42,000. It has an estimated life of Five years and the estimated residual value is $4,500. Shaggy uses the double-declining-balance method to compute depreciation.

What is the adjusted balance in the Accumulated Depreciation account at the end of 2012?

Shaggy Limited purchased a new van on January 1, 2011. The van cost $42,000. It has an estimated life of Five years and the estimated residual value is $4,500. Shaggy uses the double-declining-balance method to compute depreciation.

What is the adjusted balance in the Accumulated Depreciation account at the end of 2012?

Explanation / Answer

STRAIGHT LINE RATE = (42000-4500)/5

=7500 / 37500 *100

= 20%

DOUBLE DECLINING RATE = 40%

CALCULATION FOR DEPRECIATION EXPENSE

1ST YEAR = 16800 ( 42000*40%)

2ND YEAR = 10080 { (42000-40%) * 40%}

ACCUMULATED DEPRECIATION = 16800 + 10080

= $26880

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.