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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Business

Zain Bradford

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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Frederick Murray · Answer 1

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