On January 13, 2006, Silverio Oil Company purchased a drilling truck for

$45,000. Silverio expects the truck to last five years or 200,000 miles, with an estimated residual value of $7,500 at the end of that time. During 20x7, the truck is driven 48,000 miles. Silverio’s year end is December 31. Compute the depreciation for 20x7 under each of the following methods: (1)

straight-line, (2) production, and (3) double-declining-balance. Using the amount computed in (3), prepare the entry in journal form to record depreciation expense for the second year, and show how the Drilling Truck account would appear on the balance sheet.

Double-Declining-Balance Method