Safe Shipment Company purchased a delivery truck on January 1, 2016, at a cost of $ 100,000. The estimated useful life of the truck is 10 years, with an estimated salvage value of $ 10,000. On January 1, 2018 the airline revises the total estimated useful life to 7 years with a revised salvage value of $ 2,000. Required: Assuming the straight-line method is used, compute the revised depreciation expense for the year ended December 31, 2018.
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.
Safe Shipment Company purchased a delivery truck on January 1, 2016, at a cost of $ 100,000. The estimated useful life of the truck is 10 years, with an estimated salvage value of $ 10,000. On January 1, 2018 the airline revises the total estimated useful life to 7 years with a revised salvage value of $ 2,000. Required: Assuming the straight-line method is used, compute the revised
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