RDP and Brothers purchased a panel truck for $25,000 on January 1, 2011. It estimated the life of the truck to be five years, and it planned to depreciate an equal amount in each of the five years.

a. In line with generally accepted accounting principles, determine the amount required here.

b. Why did you decide to initially recognize the cost as an asset rather than treat it as an expense? What basic assumption of financial accounting are you relying upon in this decision?c. Why did you allocate a portion of the cost to each of the five years? What basic principal of financial accounting measurement are you relying upon in thisdecision?

Transcribed Image Text:

Period 2 Period 1 Total Costs incurred by Lahmont Payments from Maryland S300.000 400.000 SI00,000 200,000 5400.000 600,000