22. Crestview Estates purchased a tractor on January 1, 2018, for $65,000. The t
ID: 2561282 • Letter: 2
Question
22. Crestview Estates purchased a tractor on January 1, 2018, for $65,000. The tractor's useful li to be 10 years and has a residual value of $5,000. If Crestview uses the double-declining balanc depreciation what is the amount of depreciation expense that Crestview will record on Decemb end of the second year? A. $9,600 B. $10,400 C. $12,000 D. $13,000 23. Crestview Estates purchased a tractor on January 1, 2018, for $65,000. The tractor's usef to be 10 years and has a residual value of $5,000. If Crestview uses the double-declining ba depreciation what is the amount of depreciation expense that Crestview will record on Dec end of the first year? A. $12,000 B. $13,000 C. $6,500 D. $6,000 24. Crestview Estates purchased a tractor on January 1, 2018, for $65,000. The tractor's to be 30,000 miles and has a residual value of $5,000. If Crestview used the tractor 10, is the depreciation expense at the end of 2018 using the activity-based method? A. $20,000 B. $25,000 C. $23,333. D. $21667.Explanation / Answer
Dear Student, only one question is allowed at a time. I am answering the first question
22)
Depreciation under double declining balance method is double the rate on straight line rate and the depreciation rate is applied on the book value at the beginning of the year
Straight line depreciation rate
= 1 / Useful life
= 1 / 10
= 0.10 or 10%
Double declining depreciation rate
= 2 x Straight line rate
= 2 x 10%
= 20%
Depreciation for year 1, that is, 2018
= Book value at the beginning of the year x Depreciation rate
= $65,000 x 20%
= $13,000
Book value at the beginning of 2019
= Book value at the beginning of 2018 – Depreciation of 2018
= $65,000 - $13,000
= $52,000
Depreciation for second year, that is, 2019
= $52,000 x 20%
= $10,400
So, option B is the correct option
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