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On January 1, 2021, the Excel Delivery Company purchased a delivery van for $111,000. At the end of its five-year service life, it is estimated that the van will be worth $11,400. During the five-year period, the company expects to drive the van 332,000 miles. Required: Calculate annual depreciation for the five-year life of the van using each of the following methods. double declining balance

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Answer:

Annual depreciation = $44,400

Explanation:

Given,

Purchase price of the delivery van = $111,000

Salvage value = $11,400

Useful Life = 5 years

We know that

annual depreciation under double declining balance (%) = (100%/useful life)*2

Putting the value in the formula, Annual depreciation (%) =   (100%/5)*2

                                                                                               = 40%

Annual depreciation = Purchase Price*Percentage of annual depreciation

Annual depreciation = $111,000*40% = $44,400

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