Question

A truck costs $35,000 with a residual value of $2,000. Its service life is five years. Using the declining-balance method at twice the straight-line rate, the book value at the end of year 2 is

Answer 1

Not sure if this is the same as double declining balance deprecation or not. But depreciation rate for 5 year life is 20%, so double would be 40% and using declining balance at that rate: 1st yr $35,000 X 40% is $14,000 so balance at first year would be $21,000. You can figure the next year (or 2nd year) value, which is what the problem is asking.