Question

On January 1, 2016, Friedman Company purchased a truck that cost $48,000. The truck had an...

On January 1, 2016, Friedman Company purchased a truck that cost $48,000. The truck had an expected useful life of 8 years and an $8,000 salvage value. The book value of the truck at the end of 2016, assuming that Friedman uses the double declining balance method, is:

$38,000.

$38,400.

$32,000.

$36,000.

Homework Answers

Answer #1
Purchased Cost as on 1st Jan, 2016        48,000
Salvage Value           8,000
Depreciable Value        40,000
Useful Life (in Years)                   8
Annual Depreciation (SLM)           5,000
Depreciation Rate (SLM) 10.42%
Double Depreciation Rate 20.83%
Depreciation for 1st year        10,000
Book value at the end of first year (i.e. 31st Dec, 2016)        38,000
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