A truck costing $25,000 with a residual value of $5,000 was purchased by Rim Corporation. The truck's estimated life is 10 years. Complete the following table to determine its book value at the end of Year 2 using the declining-balance method. Assume a depreciation rate of twice the straight-line rate. Year Cost Accumulated Depreciation at Beginning of Year Book Value at Beginning of Year Depreciation Accumulated Depreciation at End of Year Book Value at End of Year 1 $ 25,000 2 $ 25,000
A truck costing $25,000 with a residual value of $5,000 was purchased by Rim Corporation. The truck's estimated life is 10 years. Complete the following table to determine its book value at the end of Year 2 using the declining-balance method. Assume a depreciation rate of twice the straight-line rate. Year Cost Accumulated Depreciation at Beginning of Year Book Value at Beginning of Year Depreciation Accumulated Depreciation at End of Year Book Value at End of Year 1 $ 25,000 2 $ 25,000
Chapter1: Financial Statements And Business Decisions
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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:A truck costing $25,000 with a residual value of $5,000 was purchased by Rim Corporation. The truck's estimated life is 10 years.
Complete the following table to determine its book value at the end of Year 2 using the declining-balance method. Assume a
depreciation rate of twice the straight-line rate.
Year
Cost
Accumulated
Depreciation at
Beginning of Year
Book Value at
Beginning of Year
Depreciation
Accumulated
Depreciation at End
of Year
Book Value at
End of Year
1
$
25,000
2
$
25,000
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