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13 March, 01:55

Jubilee Corp. purchased a new van for food deliveries on January 1, 2016. The van cost $75,000 with an estimated life of 5 years and $8,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the balance of the Accumulated Depreciation account at the end of 2017?

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  1. 13 March, 02:26
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    The answer is $48,000

    Explanation:

    To determine the percentage rate to be used: 100percent / 5 years

    =20percent.

    So doubling 20percent equals 40percent (This is the rate to be used).

    Depreciation for Year 2016:

    0.4 x $75,000

    =$30,000

    New Net book value = $75,000 - $30,000

    = $45,0000

    Depreciation for Year 2017:

    0.4 x $45,000

    =$18,000

    Therefore, accumulated depreciation by the end of 2017 is

    $30,000 + $18,000

    =$48,000
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