33)A tour bus was purchased for $300,000. Delivery charges amounted to $10,000 and there was a cost of $15,000 for road testing and installing security equipment. It is estimated that tour bus will have a $50,000 salvage value at the end of its 10-year useful life. Depreciation expense each year using the straight-line method will be A)$31,500 B)$27,500. C)$25,000. D)$32,500
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.
33)A tour bus was purchased for $300,000. Delivery charges amounted to $10,000 and there was a cost of $15,000 for road testing and installing security equipment. It is estimated that tour bus will have a $50,000 salvage value at the end of its 10-year useful life.
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