A delivery truck that cost $26,000 has been owned for 3 years and is traded in for another delivery truck to be used for a similar purpose. Depreciation in the amount of $5,200 has been taken each year-a total of $15,600. If the trade-in value of the old truck is $12,000 and the new truck has a fair market value of $30,000, the new truck would be recorded at a. $30,000. b. $12,000. c. $29,400. d. $10,400.

A delivery truck that cost $26,000 has been owned for 3 years and is traded in for another delivery truck to be used for a similar purpose. Depreciation in the amount of $5,200 has been taken each year-a total of $15,600. If the trade-in value of the old truck is $12,000 and the new truck has a fair market value of $30,000, the new truck would be recorded at a. $30,000. b. $12,000. c. $29,400. d. $10,400.

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Description: A delivery truck that cost $26,000 has been owned for 3 years and is traded in for another delivery truck to be used for a similar purpose.Depreciation in the amount of $5,200 has been taken each year-a total of $15,600. If the trade-in value of the

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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Concept explainers

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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Question

A delivery truck that cost $26,000 has been owned for 3 years and is traded in for another delivery truck to be used for a similar purpose.
Depreciation in the amount of $5,200 has been taken each year-a total of $15,600. If the trade-in value of the old truck is $12,000 and the
new truck has a fair market value of $30,000, the new truck would be recorded at
a. $30,000.
Ob. $12,000.
Oc. $29,400.
Od. $10,400.

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