Bob Rink depreciates his truck by the straight-line method. Calculate the yearly depreciation expense given the following:
Question:
Bob Rink depreciates his truck by the straight-line method. Calculate the yearly depreciation expense given the following:
Cost | $7,300 |
Residual value | $2,500 |
Service of useful life | 4 years |
Step by Step Answer:
The annua...View the full answer
College Accounting A Practical Approach
ISBN: 9780134729312
14th Edition
Authors: Jeffrey Slater, Mike Deschamps
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In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
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