A vehicle is purchased for $25,000 and its price is expected to drop to $4,000 after 20 years of service. Using the 150% declining balance method, what is the book value of this vehicle after 7 years of use? Do not switch to straight line depreciation. a.$11,957 b.$5,243 c.$14,485 d.$10,515 e.$8,014
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.
A vehicle is purchased for $25,000 and its price is expected to drop to $4,000 after 20 years of service. Using the 150% declining balance method, what is the book value of this vehicle after 7 years of use? Do not switch to straight line
a.$11,957
b.$5,243
c.$14,485
d.$10,515
e.$8,014
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