Problem - Donavon Company purchased a truck on January 1, 2016 at a cost of $54,000. The truck had an estimated life of 5 years and an estimated residual value of $20,000. Donavon's year end is December 31st.
Required: Compute depreciation expense for the year 2017 using the double-declining balance method: $____________
a. $22,400
b. $13,600
c. $4,960
d. $12,960
If instead, Donavon uses the straight-line method to depreciate their fixed assets, what is the book value of the equipment at December 31, 2017?
a. $40,400
b. $20,400
c. $13,600
d. $34,000
Assuming Donavon uses the straight-line method and the company sold the machine on July 1, 2018 for $24,000, determine the gain/loss on disposal.
a. $16,400 gain
b. $13,000 loss
c. $4,000 gain
d. $16,400 loss