Molly's Mobile Pet Grooming Service recently purchased a cargo van for $25,400. For depreciation purposes, the van is expected to have a useful life of 6 years and have a trade-in value of $5000. Molly uses the sum-of-the-years'-digits method to calculate depreciation. What is the book value at the end of the first year? $ What is the accumulated depreciation by the end of the second year? $ What is the annual depreciation in the third year? $
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.
Molly's Mobile Pet Grooming Service recently purchased a cargo van for $25,400. For
What is the book value at the end of the first year?
$
What is the accumulated depreciation by the end of the second year?
$
What is the annual depreciation in the third year?
$
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