Pronghorn Company acquires a delivery truck at a cost of $57,000 on January 1, 2022. The truck is expected to have a salvage value of$6,000 at the end of its 10-year useful life.Compute annual depreciation expense for the first and second years using the straight-line method.Annual depreciation expense $Year 1$Year 2

Answered: Pronghorn Company acquires a delivery…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 3EA: Montello Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is...

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Pronghorn Company acquires a delivery truck at a cost of $57,000 on January 1, 2022. The truck is expected to have a salvage value of
$6,000 at the end of its 10-year useful life.
Compute annual depreciation expense for the first and second years using the straight-line method.
Annual depreciation expense $
Year 1
$
Year 2

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Step 1: Introduction

Depreciation is defined as the accounting method implemented to allocate the cost of a long-term asset over its useful life. This is done in order to match the cost of the asset with the revenue it generates over its useful life, rather than recognizing the full cost as an expense in the year of purchase.

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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation

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