Question

On January 1, 2021, the Excel Delivery Company purchased a delivery van for $30,000. At the end of its five-year service life, it is estimated that the van will be worth $3,000. During the five-year period, the company expects to drive the van 132,000 miles. Required: Calculate annual depreciation for the five-year life of the van using each of the following methods.

2. Double-declining balance. (Round your answers to the nearest whole dollar amount.)

Answer 1

Solution:

Depreciation rate - SLM = 1/5 = 20%

Depreciation rate - DDB = 20%*2 = 40%

Depreciation Schedule - Double Declining Balance Method
Date	Asset Cost	Book Value	Depreciation Rate (20%*2)	Depreciation Expense for the year	Accumulated Depreciation	Ending Book Value
Purchase Date	$30,000
31-Dec-21		$30,000	40%	$12,000	$12,000	$18,000
31-Dec-22		$18,000	40%	$7,200	$19,200	$10,800
31-Dec-23		$10,800	40%	$4,320	$23,520	$6,480
31-Dec-24		$6,480	40%	$2,592	$26,112	$3,888
31-Dec-25		$3,888		$888	$27,000	$3,000
Total				$27,000