Rangers, Inc. purchased a truck for $64,000, with an estimated useful life of 5 years and a residual value of $8,000. The company uses the double-declining- balance method of depreciation; however, for year 3 they switch to the straight-line method. There is no change to the estimated useful life or residual value. What is the accumulated depreciation balance at the end of yeae 4?
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.
Rangers, Inc. purchased a truck for $64,000, with an estimated useful life of 5 years and a residual value of $8,000. The company uses the double-declining- balance method of
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