Montezuma Inc. purchases a delivery truck for $17,600. The truck has a salvage value of $4,000 and is expected to be driven for 8 years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After three years of recording depreciation, Montezuma determines that the delivery truck will only be useful for another three years and that the salvage value will increase to $5,000. A. Determine the Depreciation Expense for the final three years of the asset's life. Round final answer to nearest whole dollar. per year B. Prepare the journal entry for year four. If an amount box does not require an entry, leave it blank. Round final answer to nearest whole dollar. Accumulated Depreciation-Delivery Truck Cash Depreciation Expense Inventory Patent

Montezuma Inc. purchases a delivery truck for $17,600. The truck has a salvage value of $4,000 and is expected to be driven for 8 years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After three years of recording depreciation, Montezuma determines that the delivery truck will only be useful for another three years and that the salvage value will increase to $5,000. A. Determine the Depreciation Expense for the final three years of the asset's life. Round final answer to nearest whole dollar. per year B. Prepare the journal entry for year four. If an amount box does not require an entry, leave it blank. Round final answer to nearest whole dollar. Accumulated Depreciation-Delivery Truck Cash Depreciation Expense Inventory Patent

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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Apex Fitness Club uses straight-line depreciation for a machine costing $26,350, with an estimated four-year life and a $2,600 salvage value. At the beginning of the third year, Apex determines that the machine has three more years of remaining useful life, after which it will have an estimated $2,150 salvage value. Required:1. Compute the machine’s book value at the end of its second year.2. Compute the amount of depreciation for each of the final three years given the revised estimates. Book Value at the End of Year 2: Cost $26,350 Accumulated depreciation 2 years 11,875 Book value at point of revision $14,475 Compute the amount of depreciation for each of the final three years given the revised estimates. (Do not round intermediate calculations. Round your answers to the nearest whole dollar.) Revised Depreciation (Years 3-5) Book value at point of revision Revised salvage value Remaining…
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Original Cost POST. ... Accumulated Depreciation for Previous Years DATE DESCRIPTION REF. DEBIT CREDIT ... Book Value, Beginning Year 4 1 20xx ... Revised Salvage Value 2 2. ... Revised Remaining Depreciation Cost 3 ... 4 Revised Useful Life 3 Years Revised Depreciation, Total Revised Depreciation, Per Year ...
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