Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![**Depreciation Schedule for a Tractor Using Straight-Line Method**
**Problem Statement:**
A tractor costs $24,680, has an expected life of 12 years, and a salvage value of $2,600. Use straight-line depreciation to find the yearly depreciation. Create a depreciation schedule for the first three years.
---
**Instructions:**
Complete the table below:
| Year | Depreciation | Accumulated Depreciation | End-of-Year Book Value |
|------|--------------|--------------------------|------------------------|
| 1 | $[ ] | $[ ] | $[ ] |
| 2 | $[ ] | $[ ] | $[ ] |
| 3 | $[ ] | $[ ] | $[ ] |
---
**Explanation:**
This table helps calculate the depreciation of the tractor for the initial three years using the straight-line method. This method spreads the depreciation evenly over the life of the asset. The depreciation charge is calculated as follows:
\[ \text{Depreciation per year} = \frac{\text{Cost} - \text{Salvage Value}}{\text{Useful Life}} \]
**Steps:**
1. **Calculate Annual Depreciation:**
- Determine the annual depreciation using the formula above.
2. **Calculate Accumulated Depreciation:**
- Add the annual depreciation to the previous year's accumulated depreciation.
3. **Calculate End-of-Year Book Value:**
- Subtract the accumulated depreciation from the initial cost.
Use these steps to fill in the blanks for each year in the table.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F93d6464e-f155-4940-8921-7114e2ab97cc%2F546d1535-cb63-4caf-9839-b997f3d1b485%2Fisc7bx_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Depreciation Schedule for a Tractor Using Straight-Line Method**
**Problem Statement:**
A tractor costs $24,680, has an expected life of 12 years, and a salvage value of $2,600. Use straight-line depreciation to find the yearly depreciation. Create a depreciation schedule for the first three years.
---
**Instructions:**
Complete the table below:
| Year | Depreciation | Accumulated Depreciation | End-of-Year Book Value |
|------|--------------|--------------------------|------------------------|
| 1 | $[ ] | $[ ] | $[ ] |
| 2 | $[ ] | $[ ] | $[ ] |
| 3 | $[ ] | $[ ] | $[ ] |
---
**Explanation:**
This table helps calculate the depreciation of the tractor for the initial three years using the straight-line method. This method spreads the depreciation evenly over the life of the asset. The depreciation charge is calculated as follows:
\[ \text{Depreciation per year} = \frac{\text{Cost} - \text{Salvage Value}}{\text{Useful Life}} \]
**Steps:**
1. **Calculate Annual Depreciation:**
- Determine the annual depreciation using the formula above.
2. **Calculate Accumulated Depreciation:**
- Add the annual depreciation to the previous year's accumulated depreciation.
3. **Calculate End-of-Year Book Value:**
- Subtract the accumulated depreciation from the initial cost.
Use these steps to fill in the blanks for each year in the table.
Expert Solution

This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps

Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you


Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON

Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON


Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON

Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON

Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning

Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education