Revision of Depreciation A truck with a cost of $82,000 has an estimated residua

Question

Revision of Depreciation

A truck with a cost of $82,000 has an estimated residual value of $16,000, has an estimated useful life of 12 years, and is depreciated by the straight-line method.

a. Determine the amount of the annual depreciation.
$

b. Determine the book value at the end of the seventh year of use.
$

c. Assuming that at the start of the eighth year the remaining life is estimated to be six years and the residual value is estimated to be $12,000, determine the depreciation expense for each of the remaining six years.
$

Explanation / Answer

a) SLM Cost of Truck                82,000.00 Salvage Value                16,000.00 Life in years                        12.00 Depreciation(82,000 - 16,000)/12                  5,500.00 b) Book Value at end of 7th year = 82,000 - 5,500*7                43,500.00 c) Book Value at end of 7th year                  43,500.00 Life in years 6 Salvage Value                12,000.00 Depreciation = (43,500 - 12,000)/6                  5,250.00

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