The Crimson Cartage Company purchased a new truck at a cost of $42,000 on July 1. The
Question:
The Crimson Cartage Company purchased a new truck at a cost of $42,000 on July 1. The truck is estimated to have a useful life of 6 years and a salvage value of $6,000. Using the straight-line method, how much depreciation expense will be recorded for the truck during the first year ended December 31?
a. $3,000
b. $3,500
c. $4,000
d. $6,000
e. $7,000
Step by Step Answer:
c 4000 The correct answer is c 4000 To calculate the annual st...View the full answer
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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