Question
There are various depreciation methods that require an adjustment to Cost for the asset's estimated residual value. These are 1) Straight-line, 2) Units-of-Production, and 3)
There are various depreciation methods that require an adjustment to Cost for the asset's estimated residual value. These are 1) Straight-line, 2) Units-of-Production, and 3) Sum-of-the-years-digits.
For Double-Declining, no adjustment to cost is made. The residual value is left un-depreciated at the end.
A New Truck had a cost of $35,000 and was expected to operate for five years. It is estimated to be worth $3,000 at the end of it's useful life of 100,000 miles. The truck was used 25,000 miles in year one and 20,000 in year two.
A) Under each of these methods what will be the book value of the truck at the end of it's useful life? B) How much is year one's depreciation using sum-of-the year digits, unit-of-production and double-declining balance.
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