13-1 Ellen catering acquires a delivery truck at a cost of $36,000. The truck is expected to have a salvage value of $2,000 at the end of its four-year useful life. Compute annual depreciation for the first and second years using the straight-line method. 13-2 On January 1, 2008, the Villareal Mexican Bakery ledger shows Equipment $40,000 and Accumulated Depreciation $9,000. The depreciation resulted from using the straight-line method with a useful life of ten years and salvage value of $4,000. On this date, the company concludes that the equipment has a remaining useful life of only five years with the same salvage value. Compute the revised annual depreciation.
13-1 Ellen catering acquires a delivery truck at a cost of $36,000. The truck is expected to have a salvage value of $2,000 at the end of its four-year useful life. Compute annual depreciation for the first and second years using the straight-line method. 13-2 On January 1, 2008, the Villareal Mexican Bakery ledger shows Equipment $40,000 and Accumulated Depreciation $9,000. The depreciation resulted from using the straight-line method with a useful life of ten years and salvage value of $4,000. On this date, the company concludes that the equipment has a remaining useful life of only five years with the same salvage value. Compute the revised annual depreciation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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.
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Transcribed Image Text:13-1 Ellen catering acquires a delivery truck at a cost of $36,000. The truck is expected to have
a salvage value of $2,000 at the end of its four-year useful life. Compute annual depreciation
for the first and second years using the straight-line method.
13-2 On January 1, 2008, the Villareal Mexican Bakery ledger shows Equipment $40,000 and
Accumulated Depreciation $9,000. The depreciation resulted from using the straight-line method
with a useful life of ten years and salvage value of $4,000. On this date, the company concludes
that the equipment has a remaining useful life of only five years with the same salvage value.
Compute the revised annual depreciation.
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