Speed, Inc., is a shipping company. On 1/1/20, the company purchases a new commercial sleeper truck for $790,000 cash. The expected residual value of the truck is $60,000 and the expected useful life is 10 years. The company estimates that the truck will be used to drive 1,000,000 miles over its useful life (120,000 miles in 2020; 90,000 miles in 2021 & all subsquent years). For the units-of-activity method, round the depreciaiton-per-unit to two decimal places before using it. You PART A - STRAIGHT LINE DEPRECIATION Income Statement Depreciation Expense Year Ended 12/31/2020 fill in the blank 1 Year Ended 12/31/2021 fill in the blank 2 Balance Sheet Accumulated Depreciation As of 12/31/2020 fill in the blank 3 As of 12/31/2021 fill in the blank 4 PART B - UNITS-OF-ACTIVITY DEPRECIATION Income Statement Depreciation Expense Year Ended 12/31/2020 fill in the blank 5 Year Ended 12/31/2021 fill in the blank 6 Balance Sheet Accumulated Depreciation As of 12/31/2020 fill in the blank 7 As of 12/31/2021 fill in the blank 8 PART C - DOUBLE-DECLINING BALANCE DEPRECIATION Income Statement Depreciation Expense Year Ended 12/31/2020 fill in the blank 9 Year Ended 12/31/2021 fill in the blank 10 Balance Sheet Accumulated Depreciation As of 12/31/2020 fill in the blank 11 As of 12/31/2021 fill in the blank 12
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.
Speed, Inc., is a shipping company. On 1/1/20, the company purchases a new commercial sleeper truck for $790,000 cash. The expected residual value of the truck is $60,000 and the expected useful life is 10 years. The company estimates that the truck will be used to drive 1,000,000 miles over its useful life (120,000 miles in 2020; 90,000 miles in 2021 & all subsquent years).
For the units-of-activity method, round the depreciaiton-per-unit to two decimal places before using it. You
PART A - STRAIGHT LINE
| Income Statement Depreciation Expense |
Year Ended 12/31/2020 fill in the blank 1 |
Year Ended 12/31/2021 fill in the blank 2 |
| Balance Sheet |
As of 12/31/2020 fill in the blank 3 |
As of 12/31/2021 fill in the blank 4 |
PART B - UNITS-OF-ACTIVITY DEPRECIATION
| Income Statement Depreciation Expense |
Year Ended 12/31/2020 fill in the blank 5 |
Year Ended 12/31/2021 fill in the blank 6 |
| Balance Sheet Accumulated Depreciation |
As of 12/31/2020 fill in the blank 7 |
As of 12/31/2021 fill in the blank 8 |
PART C - DOUBLE-DECLINING BALANCE DEPRECIATION
| Income Statement Depreciation Expense |
Year Ended 12/31/2020 fill in the blank 9 |
Year Ended 12/31/2021 fill in the blank 10 |
| Balance Sheet Accumulated Depreciation |
As of 12/31/2020 fill in the blank 11 |
As of 12/31/2021 fill in the blank 12 |
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