Montezuma Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3114 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 $4114. Determine the depreciation expense for the final three years of the asset's life, and create the journal entry for year four.

Montezuma Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3114 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 $4114. Determine the depreciation expense for the final three years of the asset's life, and create the journal entry for year four.

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...

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