A truck with a cost of $123,000 has an estimated residual value of $24,000, has an estimated
Question:
A truck with a cost of $123,000 has an estimated residual value of $24,000, has an estimated useful life of 12 years, and is depreciated by the straight-line method.
(a) Determine the amount of the annual depreciation.
(b) Determine the book value at the end of the seventh year of use.
(c) Assuming that at the start of the eighth year the remaining life is estimated to be six years and the residual value is estimated to be $15,000, determine the depreciation expense for each of the remaining six years.
Step by Step Answer:
a Annual depreciation Using Straight Line Method Value o...View the full answer
Accounting
ISBN: 9781337902687
28th Edition
Authors: Carl S. Warren, Christine Jonick, Jennifer Schneider
Related Video
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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