Haliburton Bakery acquires a delivery truck for $80,000 and anticipates using it for eight years, at which time it will have logged 500.000 kilometres. Currently, market conditions suggest that a used truck with 500.000 kilometres on the odometer sells for $5,000. The company anticipates using the truck for about the same amount each year and therefore believes that the straight-line method is appropriate. After using and depreciating the truck for three years, management believes that the truck will remain useful for a total of 10 years, after which the residual value will be $1,500. Requirement Compute the amount of depreciation in the third and fourth years. (Round your final answer to the nearest whole dollar) Year Truck value Residual value 3 L Depreciation year 1.3 Years of service Depreciation amount
Haliburton Bakery acquires a delivery truck for $80,000 and anticipates using it for eight years, at which time it will have logged 500.000 kilometres. Currently, market conditions suggest that a used truck with 500.000 kilometres on the odometer sells for $5,000. The company anticipates using the truck for about the same amount each year and therefore believes that the straight-line method is appropriate. After using and depreciating the truck for three years, management believes that the truck will remain useful for a total of 10 years, after which the residual value will be $1,500. Requirement Compute the amount of depreciation in the third and fourth years. (Round your final answer to the nearest whole dollar) Year Truck value Residual value 3 L Depreciation year 1.3 Years of service Depreciation amount
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 8PB: Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is...
Related questions
Concept explainers
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.
Topic Video
Question
None
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 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning