Two Trucks were purchased for $1,330,000 each by a company on January 1, 2016. The double-declining balance method of depreciation is used to compute the trucks' depreciation charges and their expected useful life is 10 years or 100,000 miles. In 2016, 10,000 miles were driven, 16,500 in 2017, 12,600 in 2018, 16,000 in 2019, 16,500 in 2020, 14,800 in 2021 and 16,800 in 2022. The residual value on both trucks are $278,921 each. On July 1, 2022, the company sold one of the trucks to Daley Company for $400,000 on credit. Compute the depreciation expense for both trucks along with the gain or loss on exchange of the sold truck. Don't give answer in image

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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.