Linton Company purchased a delivery truck for $34,000 on January 1, 2015. The truck has an expected salvage value of
Linton Company purchased a delivery truck for $34,000 on January 1, 2015. The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life of 8 years. Actual miles driven were 15,000 in 2015 and 12,000 in 2016.
(a) Compute depreciation expense for 2015 and 2016 using (1) the straight-line method, (2) the units-of-activity method, and (3) the double-declining-balance method.
(b) Assume that Linton uses the straight-line method.
(1) Prepare the journal entry to record 2015 depreciation.
(2) Show how the truck would be reported in the December 31, 2015, balance sheet.
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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