Corales Company acquires a delivery truck at a cost of $58,000. The truck is expected to have a salvage value of $6,000 at the end of its 5-year useful life. Assuming the declining-balance depreciation rate is double the straight-line rate, compute annual depreciation for the first and second years under the declining-balance method.

The annual depreciation for the first and second years under the declining-balance method is $29,000 and $14,500 respectively

Explanation:

In the declining balance method, the depreciation rate is double of the straight line method.

So, the depreciation rate = (100 : useful life) * double

= (100 : 5) * 2

= 50%

The annual depreciation for the first year = Acquire price * depreciation rate

= $58,000 * 50%

= $29,000

And, the annual depreciation for the second year = Year 1 annual depreciation * depreciation rate

= $29,000 * 50%

= $14,500