Teddy's delivery company bought a used truck at the beginning of the year at a cost of $6,570. The estimated useful life was 3 years and the residual value was estimated to be $570. Assume that the estimated productive life of the machine is 3,000 miles. Expected annual production (annual miles driven) is as follows:
Teddy's delivery company bought a used truck at the beginning of the year at a cost of $6,570. The estimated useful life was 3 years and the residual value was estimated to be $570. Assume that the estimated productive life of the machine is 3,000 miles. Expected annual production (annual miles driven) is as follows:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
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.
Topic Video
Question
sd
Transcribed Image Text:Teddy's delivery company bought a used truck at the beginning of the year at a cost of
$6,570. The estimated useful life was 3 years and the residual value was estimated to be
$570. Assume that the estimated productive life of the machine is 3,000 miles.
Expected annual production (annual miles driven) is as follows:
Year 1, 1,500 miles
Year 2, 900 miles
Year 3, 600 miles
N
"
Required:
1. Complete a depreciation schedule for each of the alternative methods. (Do not
round Intermediate calculations.)
a. Straight-line.
Year
At acquisition
1
2
3
Year
At acquisition
1
2
3
Income
Statement
b. Activity-based.
Year
Depreciation
Expense
At acquisition
1
2
3
S
2,000 $
2,000
2,000
Income
Statement
Depreciation
Expense
$
3,000 $
1,800
1,200
c. Double-declining-balance.
Income
Statement
$
Depreciation
Expense
Cost
4,380 $
8,760
810
Cost
Balance Sheet
6,570 $
6,570
6,570
Accumulated
Depreciation
Cost
Balance Sheet
6,570 S
6,570
6,570
2,000
4,000
6,000
Accumulated
Depreciation
3,000
4,800
6,000
Balance Sheet
6,570 $
6,570
6,570
Accumulated
Depreciation
4,380
5,780
6,570
Book Value
4,570
2,570
570
Book Value
S 6,570
3,570
1,770
570
Book Value
S 6,570
2,190
810
D
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 9 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education