10. Gingerbread Corp purchased a refrigerated truck on January 1, 2019 for $70,000. The company uses the straight line method of depreciation, estimates a salvage value of $20,000, and a useful life of 5 years. What will be the net book value of the truck on December 31, 2020 after the current years adjusting entry for depreciation? (hint: this is after 2 years of depreciation) a.$50,000 b.$70,000 c.$40,000 d.$60,000
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
10. Gingerbread Corp purchased a refrigerated truck on January 1, 2019 for $70,000. The company uses the
a.$50,000
b.$70,000
c.$40,000
d.$60,000
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