Purchased a used heavy duty truck for $83,500 on January2, 2016, It was repaired at a cost of $3,420 and installed on a new platform costing $1,080. The useful life will be 6 years,. Residual value is $14,800 on Sep30, 2021, it was retired: 1) sold it for 15,000 2) sold it for $19,500 Please prepare all the calculation and related entries.
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.
Purchased a used heavy duty truck for $83,500 on January2, 2016, It was repaired at a cost of $3,420 and installed on a new platform costing $1,080. The useful life will be 6 years,. Residual value is $14,800
on Sep30, 2021, it was retired:
1) sold it for 15,000
2) sold it for $19,500
Please prepare all the calculation and related entries.
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