Quick-as-Lightning, a delivery service, purchased a new delivery truck for $40,000 on January 1, 2009. The truck
Question:
Quick-as-Lightning, a delivery service, purchased a new delivery truck for $40,000 on January 1, 2009. The truck is expected to have a useful life of ten years or 150,000 miles and an expected residual value of $3,000. The truck was driven 15,000 miles in 2009 and 13,000 miles in 2010.
Required:
1. Compute depreciation expense for 2009 and 2010 using the:
a. Straight-line method
b. Double-declining-balance method
c. Units-of-production method
2. For each method, what is the book value of the machine at the end 2009? At the end of 2010?
Step by Step Answer:
1 Depreciation expense a Straightline method Depreciation expense 40000 30...View the full answer
Cornerstones of Financial and Managerial Accounting
ISBN: 978-0324787351
1st Edition
Authors: Rich Jones, Mowen, Hansen, Heitger
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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