Performing depreciation computations is relatively straightforward once you have quantified all the inputs The difficult part is often quantifying the inputs Consider the following scenario Your business recently purchased a new delivery truck The company's accountant is now asking you, the business owner, for the following information relating to the truck so that she can perform depreciation calculations How long is this delivery truck's estimated useful life to your business What do you anticipate the delivery truck's salvage value to be at the end of that useful life Do you have a preference for the pattern of depreciation for this delivery truck Respond to the questions How would you determine a delivery truck's useful life to your business How would you approximate the salvage value for the delivery truck Remember, salvage value would need to be determined for the end of the useful life to your business, not just the end of the truck's actual physical life Would you prefer an accelerated depreciation method or the straight line method in depreciating the truck Why

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Question: Performing depreciation computations is relatively straightforward once you have quantified all the inputs. The difficult part is often quantifying the inputs. Consider the following scenario:

Performing depreciation computations is relatively straightforward once you have quantified all the inputs. The difficult part is often quantifying the inputs. Consider the following scenario:

Your business recently purchased a new delivery truck. The company's accountant is now asking you, the business owner, for the following information relating to the truck so that she can perform depreciation calculations:

How long is this delivery truck's estimated useful life to your business?
What do you anticipate the delivery truck's salvage value to be at the end of that useful life?
Do you have a preference for the pattern of depreciation for this delivery truck?

Respond to the questions

How would you determine a delivery truck's useful life to your business?
How would you approximate the salvage value for the delivery truck? Remember, salvage value would need to be determined for the end of the useful life to your business, not just the end of the truck's actual physical life.
Would you prefer an accelerated depreciation method or the straight-line method in depreciating the truck? Why?

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