Cullumber Ltd. purchased a delivery truck on January 1, 2018, at a cost of $72,9
ID: 2565042 • Letter: C
Question
Cullumber Ltd. purchased a delivery truck on January 1, 2018, at a cost of $72,960. The truck is expected to have a residual value of $7,750 at the end of its 4-year useful life. Cullumber has a December 31 year end. Use the diminishing-balance method and assume the depreciation rate is equal to double the straight-line rate.
a) Calculate the depreciation for each year of the truck’s life.
Brief Exercise 9-6 a-b Cullumber Ltd. purchased a delivery truck on January 1, 2018, at a cost of $72,960. The truck is expected to have a residual value of $7,750 at the end of its 4-year useful life. Cullumber has a December 31 year end. Use the diminishing-balance method and assume the depreciation rate is equal to double the straight-line rate. Calculate the depreciation for each year of the truck's life. (Round answers to O decimal places, e.g. 5,275. Depreciation expense 2018 2019 2020 2021 LINK TO TEXT Calculate the depreciation in total over the truck's life Total depreciation expenseExplanation / Answer
Straight line depreciation percent = 100% / 4 years
= 25%
Depreciation rate = 2 * 25%
= 50%
Depreciation expense:
2018
Depreciation = $72960 * 50% = $36480
2019
Depreciation = ($72960 - $36480) * 50% = $18240
2020
Depreciation = ($72960 - $36480 - $18240) * 50% = $9120
2021
Depreciation = ($72960 - $36480 - $18240 - $9120) * 50% = $4560
Total depreciation expense = $68400.
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