Farr company purchased a new van for Floral deliveries on January 1 2018

Accounting Sep 15, 2020

Farr company purchased a new van for Floral deliveries on January 1 2018. the van cost $56,000 with an estimated life of 5 years and $14000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the depreciation expense for 2018?

Expert Solution

Computation of Depreciation for 2018 using Double-Declining Balance Method:

Straight Line Depreciation Rate = (1/Useful life) * 2

= (1/5) * 2

= 40%

Depreciation for 2018 = Cost of Van * Straight Line Depreciation Rate

= $56,000*40%

= $22,400

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