A vehicle costing $30,000 has a useful life of 4 years and a salvage value of $3

₹0.0

📥 Instant PDF Download
♾ Lifetime Access
🛡 Secure & Original Content

What’s inside this PDF?

Question: A vehicle costing $30,000 has a useful life of 4 years and a salvage value of $3,000. What is the annual depreciation using the declining balance method at 25%?

Options:

$7,500
$6,750
$8,250
$9,000

Correct Answer: $6,750

Solution:

Depreciation Expense = Book Value at Beginning of Year x Depreciation Rate. Year 1: $30,000 x 25% = $7,500. Year 2: ($30,000 - $7,500) x 25% = $5,625.

A vehicle costing $30,000 has a useful life of 4 years and a salvage value of $3

Practice Questions

A vehicle costing $30,000 has a useful life of 4 years and a salvage value of $3,000. What is the annual depreciation using the declining balance method at 25%?

$7,500
$6,750
$8,250
$9,000

Questions & Step-by-Step Solutions

A vehicle costing $30,000 has a useful life of 4 years and a salvage value of $3,000. What is the annual depreciation using the declining balance method at 25%?

Step 1: Identify the initial cost of the vehicle, which is $30,000.
Step 2: Determine the depreciation rate, which is 25%.
Step 3: Calculate the depreciation expense for Year 1 by multiplying the initial cost by the depreciation rate: $30,000 x 25% = $7,500.
Step 4: Subtract the Year 1 depreciation from the initial cost to find the book value at the beginning of Year 2: $30,000 - $7,500 = $22,500.
Step 5: Calculate the depreciation expense for Year 2 by multiplying the book value at the beginning of Year 2 by the depreciation rate: $22,500 x 25% = $5,625.

Declining Balance Method – A method of calculating depreciation where a fixed percentage is applied to the book value of the asset at the beginning of each year.
Depreciation Calculation – Understanding how to calculate annual depreciation based on initial cost, useful life, and salvage value.

A vehicle costing $30,000 has a useful life of 4 years and a salvage value of $3

What’s inside this PDF?

A vehicle costing $30,000 has a useful life of 4 years and a salvage value of $3

Practice Questions

Questions & Step-by-Step Solutions

On a scale of 0–10, how likely are you to recommend The Soulshift Academy?