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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Use the information in Problem A-1 to solve this problem.

Required

Prepare a schedule of depreciation using the double-declining-balance method.

PROBLEM A-1 A delivery van was bought for $18,000. The estimated life of the van is four years. The trade-in value at the end of four years is estimated to be $2,000.

Check Figure

Year 2 depreciation, $4,500

To determine

Prepare depreciation schedule for the four year estimated useful life of the delivery van under double-declining-balance depreciation method.

Explanation

Double-declining-balance (DDB) method: The depreciation method which assumes that the consumption of economic benefits of long-term asset is high in the early years but gradually declines towards the end of its useful life, is referred to as double-declining-balance method.

Formula for double-declining-balance depreciation method:

Depreciation expense}=(Book value at the beginning of the 

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