MODULE 5 8-5 USE OF ASSETPlease read the following question and provide the correct answer and explain how you came to that answer. Thank you!Nerdz, Inc. has just acquired a new truck for use in the business.  Cost of the truck  was $40,000.  Nerdz has determined that the life of the truck will be three years and no salvage.  Depreciation is straight-linea) Journalize the entry to record the depreciation for the first year of asset's lifeb) Journalize the entry to record the depreciation for the first month of teh asset's life.

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Asked Feb 18, 2020
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MODULE 5 8-5 USE OF ASSET

Please read the following question and provide the correct answer and explain how you came to that answer. Thank you!

Nerdz, Inc. has just acquired a new truck for use in the business.  Cost of the truck  was $40,000.  Nerdz has determined that the life of the truck will be three years and no salvage.  Depreciation is straight-line

a) Journalize the entry to record the depreciation for the first year of asset's life

b) Journalize the entry to record the depreciation for the first month of teh asset's life.

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Expert Answer

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Step 1

Depreciation refers to the amount of permanent loss in the value of an asset. It is reduction in the value of an asset which can be due to natural calamity, wear n tear, handling issues.

Under straight-line depreciation method, the rate of depreciation remains same in each year.

Step 2

(a)

Cost of the truck: $40,000

Salvage value: $0

Useful life: 3 years

The depreciation for 1 year is calculated as follows:

Accounting homework question answer, step 2, image 1

The journal to record depreciation for the first year is as follows:

Accounting homework question answer, step 2, image 2

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