23. Crestview Estates purchased a tractor on January 1, 2018, for $65,000. The t

Question

23. Crestview Estates purchased a tractor on January 1, 2018, for $65,000. The tractors usef to be 10 years and has a residual value of $5,000. If Crestview uses the double-declining ba depreciation what is the amount of depreciation expense that Crestview will record on Dec end of the first year? A. $12,000 B. $13,000 C. $6,500 D. $6,000 24. Crestview Estates purchased a tractor on January 1, 2018, for $65,000. The tractor's to be 30,000 miles and has a residual value of $5,000. If Crestview used the tractor 10, is the depreciation expense at the end of 2018 using the activity-based method? A. $20,000 B. $25,000 C. $23,333. D. $21667

Explanation / Answer

Question - 23

Under double decline method, rate of depreciation = 1 / 10 years * 100 * 2 = 20%

Depreciation = 65000 * 20% = 13000................final answer

Question - 24

Depreciation per hour = [Cost - scrape] / life in miles = [65000 - 5000] / 30000 miles = $ 2 per mile

Depreciation for 2018 = 10000 miles * 2 = 20000 ................final answer

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