Barefoot Industrial acquired a new delivery truck at the beginning of its current fiscal year. The truck cost $27,000 and has anestimated useful life of four years and an estimated salvage value of $4,000.Required:a-1. Calculate depreciation expense for each year of the truck's life using Straight-line depreciation.Depreciation expense $ 13,500 per yeara-2. Calculate depreciation expense for each year of the truck's life using Double-declining-balance depreciation.Year Depreciation Expense1$27,0006,7506,7503,375234$$b. Calculate the truck's net book value at the end of its third year of use under each depreciation method.Depreciation methodStraight-line depreciationDouble-declining-balancedepreciationNet book valueS5,750S6,750c. Assume that Barefoot Industrial had no more use for the truck after the end of the third year and that at the beginning of the fourthyear It had an offer from a buyer who was willing to pay $6,300 for the truck. Should the depreciation method used by BarefootIndustrial affect the decision to sell the truck?O YesO No

Depreciation means reduction in value of asset over the period of time. Under straight line method,…

Barefoot Industrial acquired a new delivery truck at the beginning of its current fiscal year. The truck cost $27,000 and has an estimated useful life of four years and an estimated salvage value of $4,000. Required: a-1. Calculate depreciation expense for each year of the truck's life using Straight-line depreciation. Depreciation expense $ 13,500 per year a-2. Calculate depreciation expense for each year of the truck's life using Double-declining-balance depreciation. Year Depreciation Expense 1 2 3 4 $ $ $ $ b. Calculate the truck's net book value at the end of its third year of use under each depreciation method. 27,000 6,750 6,750 3,375 Depreciation method Straight-line depreciation Double-declining-balance depreciation O Yes O No Net book value S S 5,750 6,750 c. Assume that Barefoot Industrial had no more use for the truck after the end of the third year and that at the beginning of the fourth year it had an offer from a buyer who was willing to pay $6,300 for the truck. Should the depreciation method used by Barefoot Industrial affect the decision to sell the truck?

Barefoot Industrial acquired a new delivery truck at the beginning of its current fiscal year. The truck cost $27,000 and has an estimated useful life of four years and an estimated salvage value of $4,000. Required: a-1. Calculate depreciation expense for each year of the truck's life using Straight-line depreciation. Depreciation expense $ 13,500 per year a-2. Calculate depreciation expense for each year of the truck's life using Double-declining-balance depreciation. Year Depreciation Expense 1 2 3 4 $ $ $ $ b. Calculate the truck's net book value at the end of its third year of use under each depreciation method. 27,000 6,750 6,750 3,375 Depreciation method Straight-line depreciation Double-declining-balance depreciation O Yes O No Net book value S S 5,750 6,750 c. Assume that Barefoot Industrial had no more use for the truck after the end of the third year and that at the beginning of the fourth year it had an offer from a buyer who was willing to pay $6,300 for the truck. Should the depreciation method used by Barefoot Industrial affect the decision to sell the truck?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 11PA: Montezuma Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and...

See similar textbooks

Similar questions

Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.
Montello Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for eight years. Montello uses the straight-line depreciation method. Calculate the annual depreciation expense.
Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for ten years. Montello uses the straight-line depreciation method. Calculate the annual depreciation expense.
IMPACT OF IMPROVEMENTS AND REPLACEMENTS ON THE CALCULATION OF DEPRECIATION On January 1, 20-1, Dans Demolition purchased two jackhammers for 2,500 each with a salvage value of 100 each and estimated useful lives of four years. On January 1, 20-2, a stronger blade to improve performance was installed in Jackhammer A for 800 cash and the compressor was replaced in Jackhammer B for 200 cash. The compressor is expected to extend the life of Jackhammer B one year beyond the original estimate. REQUIRED 1. Using the straight-line method, prepare general journal entries for depreciation on December 31, 20-1, for Jackhammers A and B. 2. Enter the transactions for January 20-2 in a general journal. 3. Assuming no other additions, improvements, or replacements, calculate the depreciation expense for each jackhammer for 20-2 through 20-4.
When depreciation is recorded each period, what account is debited? a. Depreciation Expense b. Cash c. Accumulated Depreciation d. The fixed asset account involved Use the following information for Multiple-Choice Questions 7-4 through 7-6: Cox Inc. acquired a machine for on January 1, 2019. The machine has a salvage value of $20,000 and a 5-year useful life. Cox expects the machine to run for 15,000 machine hours. The machine was actually used for 4,200 hours in 2019 and 3,450 hours in 2020.
Colquhoun International purchases a warehouse for $300,000. The best estimate of the salvage value at the time of purchase was $15,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. Calculate annual depreciation expense for the first four years. Determine the depreciation expense for the final fifteen years of the assets life, and create the journal entry for year five.
Montezuma Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for eight years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After three years of recording depreciation, Montezuma determines that the delivery truck will only be useful for another three years and that the salvage value will increase to $4,000. Determine the depreciation expense for the final three years of the assets life, and create the journal entry for year four.
During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated seven machines for $250,000 to improve efficiency in production of their remaining useful life of eight years Low-cost repairs throughout the year totaled $79,000 Replaced a broken gear on a machine for $6,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?
Loban Company purchased four cars for 9,000 each and expects that they will be sold in 3 years for 1,500 each. The company uses group depreciation on a straight-line basis. Required: 1. Prepare journal entries to record the acquisition and the first years depreciation expense. 2. If one of the cars is sold at the beginning of the second year for 7,000, what journal entry is required?
Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one the company expects the truck to be driven for 26,000 miles; in year two, 30,000 miles; and in year three, 40,000 miles. Consider how the purchase of the truck will impact Montellos depreciation expense each year and what the trucks book value will be each year after depreciation expense is recorded.
A machine costing 350,000 has a salvage value of 15,000 and an estimated life of three years. Prepare depreciation schedules reporting the depreciation expense, accumulated depreciation, and book value of the machine for each year under the double-declining-balance and sum-of-the-years-digits methods. For the double-declining-balance method, round the depreciation rate to two decimal places.
A delivery van was bought for 18,000. The estimated life of the van is four years. The trade-in value at the end of four years is estimated to be 2,000. Required Prepare a depreciation schedule for the four-year period using the straight-line method. Check Figure Year 1 depreciation, 4,000