Yoshi Company completed the following transactions and events involving its delivery trucks. Year 1 January 1 Paid $25,015 cash plus $1,635 in sales tax for a new delivery truck estimated to have a five-year life and a $2,450 salvage value. Delivery truck costs are recorded in the Trucks account. December 31 Recorded annual straight-line depreciation on the truck. Year 2 December 31 The truck’s estimated useful life was changed from five to four years, and the estimated salvage value was increased to $2,550. Recorded annual straight-line depreciation on the truck. Year 3 December 31 Recorded annual straight-line depreciation on the truck. December 31 Sold the truck for $5,400 cash. Required: 1-a. Calculate depreciation for Year 2. 1-b. Calculate book value and gain (loss) for sale of Truck on December 31, Year 3. 1-c. Prepare journal entries to record these transactions and events.
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.
Can I please get help with this practice question?7.11
Yoshi Company completed the following transactions and events involving its delivery trucks.
Year 1
| January 1 | Paid $25,015 cash plus $1,635 in sales tax for a new delivery truck estimated to have a five-year life and a $2,450 salvage value. Delivery truck costs are recorded in the Trucks account. |
|---|---|
| December 31 | Recorded annual straight-line |
Year 2
| December 31 | The truck’s estimated useful life was changed from five to four years, and the estimated salvage value was increased to $2,550. Recorded annual straight-line depreciation on the truck. |
|---|
Year 3
| December 31 | Recorded annual straight-line depreciation on the truck. |
|---|---|
| December 31 | Sold the truck for $5,400 cash. |
Required:
1-a. Calculate depreciation for Year 2.
1-b. Calculate book value and gain (loss) for sale of Truck on December 31, Year 3.
1-c. Prepare
- Required 1A
- Required 1B
- Required 1C
Calculate depreciation for Year 2.
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Calculate book value and gain (loss) for sale of Truck on December 31, Year 3.
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| Date | Journal | Debit | Credit |
| Jan 1 Year 1(total cost of new truck) | |||
| Dec 31 Year 1(Record the year-end |
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| Dec 31 year 2(Record the year-end adjusting entry for the depreciation expense of the delivery truck.) | |||
| Dec 31 Year 3(Record the year-end adjusting entry for the depreciation expense of the delivery truck.) | |||
| Dec 31 Year 3(record the sale of the delivery truck for $5,400 cash.) |
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