Freebird Inc acquired a truck to transport its inventory from the port to its various stores. The truck cost $125,000; taxes and licensing fees were $12,000; a custom paint job to put the firm logo on cost $5,000. In the first week of use, an inexperienced driver shredded two of the truck's tires, necessitating replacement tires that cost $750. The truck is estimated to last 5 years or 200,000 miles. It has an expected salvage value of $10,000. In year 1, the truck is estimated to be driven 40,000 miles; in years 2 and 3 the truck's mileage is estimated to be 50,000 per year, and 30,000 per year for years 4 and 5. Required: Find the depreciation expense, A/D, and book value after two years, using 3 different methods: straight-line, units of production, double-declining balance.

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 7PB: Tree Lovers Inc. purchased 2,500 acres of woodland in which it intends to harvest the complete...
icon
Related questions
Question
Freebird Inc acquired a truck to transport its inventory from the port to its various stores. The truck cost $125,000; taxes and licensing
fees were $12,000; a custom paint job to put the firm logo on cost $5,000. In the first week of use, an inexperienced driver shredded
two of the truck's tires, necessitating replacement tires that cost $750. The truck is estimated to last 5 years or 200,000 miles. It has an
expected salvage value of $10,000.
In year 1, the truck is estimated to be driven 40,000 miles; in years 2 and 3 the truck's mileage is estimated to be 50,000 per year, and
30,000 per year for years 4 and 5.
Required:
Find the depreciation expense, A/D, and book value after two years, using 3 different methods: straight-line, units of production,
double-declining balance.
Transcribed Image Text:Freebird Inc acquired a truck to transport its inventory from the port to its various stores. The truck cost $125,000; taxes and licensing fees were $12,000; a custom paint job to put the firm logo on cost $5,000. In the first week of use, an inexperienced driver shredded two of the truck's tires, necessitating replacement tires that cost $750. The truck is estimated to last 5 years or 200,000 miles. It has an expected salvage value of $10,000. In year 1, the truck is estimated to be driven 40,000 miles; in years 2 and 3 the truck's mileage is estimated to be 50,000 per year, and 30,000 per year for years 4 and 5. Required: Find the depreciation expense, A/D, and book value after two years, using 3 different methods: straight-line, units of production, double-declining balance.
Expert Solution
steps

Step by step

Solved in 6 steps with 5 images

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
CONCEPTS IN FED.TAX., 2020-W/ACCESS
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:
9780357110362
Author:
Murphy
Publisher:
CENGAGE L
Financial Accounting
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning