Wilkens Corporation acquired a delivery truck on January 1, 2015. The total cost of the truck was $138,000. Wilkens estimated that the truck would be used for 10 years and have a salvage value of $28,500. Wilkens uses the double-declining balance method of depreciation. Based on this information, the depreciation expense calculated for year-end December 31, 2017 will be:

The depreciation expense for the year 2017 will be $17664.

Explanation:

The double declining balance method is an accelerated method of charging depreciation on an asset. The depreciation rate under double declining balance method is twice of that of the straight line method and it charges higher depreciation in the initial years and less depreciation in the later years as it charges depreciation on the book value of the asset at start.

The formula for double declining method depreciation is,

Depreciation expense = 2 * Straight line Depreciation rate * Book Value at start of the period

The straight line depreciation rate is,    100% / 10  =  10% per year

The Depreciation expense for 2015 = 2 * 10% * 138000   = $27600

Book value at end of 2015 = 138000 - 27600 = $110400

The Depreciation expense for 2016 = 2 * 10% * 110400   = $22080

Book value at end of 2015 = $110400 - 22080  = $88320

The Depreciation expense for 2017 = 2 * 10% * 88320   = $17664

Book value at end of 2015 = 88320 - 17664 = $70656

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