Renoir associates purchased a vehicle for $64,000, with an estimated useful life of 8 years and a salvage value of $10,000. The company uses the double-declining-balance method of depreciation; however, after year 3 they switch to the straight-line method. There is no change to the estimated useful life or salvage value. What is the accumulated depreciation balance at the end of year 5 (round to
the nearest dollar)? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)
A) $40,400
B) $43,800
C) $48,333
D) $43,750
B) $43,800
Explanation: 1: 2/useful life × book value at beginning of year = depreciation expense; step 2: 2/useful life × (price - year 1 depreciation) = depreciation year 2; step 3: 2/useful life × (book value - depreciation year 2); step 4: (book value - salvage value)/remaining useful life = depreciation years 4 and 5; step 5: add together all accumulated depreciation.
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