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Declining Balance Depreciation Irons Delivery Inc. purchased a new delivery truck for $40,600 on January 1, 2019. The truck is expected to have a $2,000 residual value at the end of its 5-year useful life. Irons uses the double-declining-balance method of depreciation. Required: Prepare the journal entry to record depreciation expense for 2019 and 2020.

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Answer:

A. Depreciation expense $16240

Cr Accumulated depreciation $16240

B. Dr Depreciation expense $9744

Cr Accumulated depreciation $9744

Explanation:

A. Preparation of the journal entry to record depreciation expense for 2019 and 2020.

Dr Depreciation expense $16240

Cr Accumulated depreciation $16240

(Record double-declining-balance depreciation expense)

Depreciation expense for 2019= $40,600 × (1/5 × 2)

Depreciation expense for 2019= $16240

B. Preparation of the journal entry to record depreciation expense for 2020

Dr Depreciation expense $9744

Cr Accumulated depreciation $9744

[($40,600 –$16,240) × (1/5 × 2) = 9744]

(Record double-declining-balance depreciation expense)Depreciation expense for 2020

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