Cullumber Ltd. purchased a delivery truck on January 1, 2024, at a cost of $64,000. The truck is expected to have a residual value of $6,400 at the end of its 4-year useful life. Cullumber has a December 31 year end. Use the diminishing-balance method and assume the depreciation rate is equal to double the straight-line rate. (a) - Your answer is partially correct. Calculate the depreciation for each year of the truck's life. 2024 2025 $ 2026 $ 2027 $ Depreciation Expense 32000 16000 8000 4000
Cullumber Ltd. purchased a delivery truck on January 1, 2024, at a cost of $64,000. The truck is expected to have a residual value of $6,400 at the end of its 4-year useful life. Cullumber has a December 31 year end. Use the diminishing-balance method and assume the depreciation rate is equal to double the straight-line rate. (a) - Your answer is partially correct. Calculate the depreciation for each year of the truck's life. 2024 2025 $ 2026 $ 2027 $ Depreciation Expense 32000 16000 8000 4000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:Cullumber Ltd. purchased a delivery truck on January 1, 2024, at a cost of $64,000. The truck is expected to have a residual value of
$6,400 at the end of its 4-year useful life. Cullumber has a December 31 year end. Use the diminishing-balance method and assume
the depreciation rate is equal to double the straight-line rate.
(a)
- Your answer is partially correct.
Calculate the depreciation for each year of the truck's life.
2024
2025
2026
2027
$
$
$
$
Depreciation Expense
32000
16000
8000
4000
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