A company purchased a large new truck-tractor for over-the-road use. It has a cost basis of s180,000 with additional options costing $15,000.The cost basis for depreciation purposes is $195.000. Its market(salvage) value at the end of 5 years is estimated as $40,000. Using Sinking Fund Method with i= 12%, what is the book value at the end of 3rd year? Using Sum-of-the-years-digit method, what is the depreciation cost at the 2 nd year?

A company purchased a large new truck-tractor for over-the-road use. It has a cost basis of s180,000 with additional options costing $15,000.The cost basis for depreciation purposes is $195.000. Its market(salvage) value at the end of 5 years is estimated as $40,000. Using Sinking Fund Method with i= 12%, what is the book value at the end of 3rd year? Using Sum-of-the-years-digit method, what is the depreciation cost at the 2 nd year?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A company purchased a large new truck-tractor for over-the-road use. It has a cost basis of $180,000 with
additional options costing $15,000.The cost basis for depreciation purposes is $195.000. Its market(salvage)
value at the end of 5 years is estimated as $40,000.
Using Sinking Fund Method with i= 12%, what is the book value at the end of 3rd year?
Using Sum-of-the-years-digit method, what is the depreciation cost at the 2nd year?

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