Barefoot Industrial acquired a new delivery truck at the beginning of its current fiscal year. The truck cost $27,000 and has anestimated useful life of four years and an estimated salvage value of $4,000.Required:a-1. Calculate depreciation expense for each year of the truck's life using Straight-line depreciation.Depreciation expense $ 13,500 per yeara-2. Calculate depreciation expense for each year of the truck's life using Double-declining-balance depreciation.Year Depreciation Expense1$27,0006,7506,7503,375234$$b. Calculate the truck's net book value at the end of its third year of use under each depreciation method.Depreciation methodStraight-line depreciationDouble-declining-balancedepreciationNet book valueS5,750S6,750c. Assume that Barefoot Industrial had no more use for the truck after the end of the third year and that at the beginning of the fourthyear It had an offer from a buyer who was willing to pay $6,300 for the truck. Should the depreciation method used by BarefootIndustrial affect the decision to sell the truck?O YesO No

Depreciation means reduction in value of asset over the period of time. Under straight line method,…

Barefoot Industrial acquired a new delivery truck at the beginning of its current fiscal year. The truck cost $27,000 and has an estimated useful life of four years and an estimated salvage value of $4,000. Required: a-1. Calculate depreciation expense for each year of the truck's life using Straight-line depreciation. Depreciation expense $ 13,500 per year a-2. Calculate depreciation expense for each year of the truck's life using Double-declining-balance depreciation. Year Depreciation Expense 1 2 3 4 $ $ $ $ b. Calculate the truck's net book value at the end of its third year of use under each depreciation method. 27,000 6,750 6,750 3,375 Depreciation method Straight-line depreciation Double-declining-balance depreciation O Yes O No Net book value S S 5,750 6,750 c. Assume that Barefoot Industrial had no more use for the truck after the end of the third year and that at the beginning of the fourth year it had an offer from a buyer who was willing to pay $6,300 for the truck. Should the depreciation method used by Barefoot Industrial affect the decision to sell the truck?

Barefoot Industrial acquired a new delivery truck at the beginning of its current fiscal year. The truck cost $27,000 and has an estimated useful life of four years and an estimated salvage value of $4,000. Required: a-1. Calculate depreciation expense for each year of the truck's life using Straight-line depreciation. Depreciation expense $ 13,500 per year a-2. Calculate depreciation expense for each year of the truck's life using Double-declining-balance depreciation. Year Depreciation Expense 1 2 3 4 $ $ $ $ b. Calculate the truck's net book value at the end of its third year of use under each depreciation method. 27,000 6,750 6,750 3,375 Depreciation method Straight-line depreciation Double-declining-balance depreciation O Yes O No Net book value S S 5,750 6,750 c. Assume that Barefoot Industrial had no more use for the truck after the end of the third year and that at the beginning of the fourth year it had an offer from a buyer who was willing to pay $6,300 for the truck. Should the depreciation method used by Barefoot Industrial affect the decision to sell the truck?

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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