Teal Mountain Company purchased a truck for $74,000. The company expected the truck to last four years or 100,000 miles, with an estimated residual value of $7,000 at the end of that time. During the second year, the truck was driven 26,000 miles. Compute the depreciation for the second year under each of the methods below. Units-of-activity Double-declining-balance $ $ tA
Teal Mountain Company purchased a truck for $74,000. The company expected the truck to last four years or 100,000 miles, with an estimated residual value of $7,000 at the end of that time. During the second year, the truck was driven 26,000 miles. Compute the depreciation for the second year under each of the methods below. Units-of-activity Double-declining-balance $ $ tA
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Teal Mountain Company purchased a truck for $74,000. The company expected the truck to last four years or 100,000 miles, with an
estimated residual value of $7,000 at the end of that time. During the second year, the truck was driven 26,000 miles.
Compute the depreciation for the second year under each of the methods below.
Units-of-activity
Double-declining-balance
$
$
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