Question

A truck cost 8,900 with a residual value of 500. it is estimated the useful life of the truck is 4years. the amount of depreciation expense in year 2 by using the declining balance at twice thestraight line rate is

Answer 1

Depreciation rate as per straight line method

(8900 - 500) / 4

8400/4 =Rs. 2100

(2100/8400) × 100 = 25%

Depreciation rate as per declining balance method :

2(25%) = 50%

Depreciation in the first year = 8400 - 4200 = Rs.4200

Depreciation on the first day of 2nd year = Rs.4200

Depreciation for the second year as per declining balance method = 4200×50% = Rs.2100