Ayayai Corporation purchased a truck at the beginning of 2023 for $37,800. The truck is estimated to have a residual value of $3,000 and a useful life of 290,000 km. It was driven for 69,000 km in 2023 and 77,000 km in 2024. (a) Your answer is correct. Calculate depreciation expense for 2023 and 2024 using the units of production method. (Round depreciation per km to 4 decimal places, e.g. 15.1254 and round final answers to O decimal places, e.g. 5,275.) Depreciation expense $ 2023 8280 $ 2024 9240
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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