Question

On January 1, Year 1, Missouri Company purchased a truck that cost $56,000. The truck had an expected useful life of 10 years and a $5,000 salvage value. The amount of depreciation expense recognized in Year 2 assuming that Missouri uses the double declining-balance method is:__________

Answer 1

Annual depreciation= $8,160

Step-by-step explanation:

Giving the following information:

Purchase price= $56,000

Useful life= 10 years

Salvage value= $5,000

To calculate the annual depreciation, we need to use the following formula:

Annual depreciation= 2*[(book value)/estimated life (years)]

Year 1:

Annual depreciation= 2*[(56,000 - 5,000) / 10]

Annual depreciation= $10,200

Year 2:

Annual depreciation= 2*[(51,000 - 10,200) / 10]

Annual depreciation= $8,160