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A delivery truck was acquired on January 1, 1998. The cash price of the truck was $142,400 and...

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A delivery truck was acquired on January 1, 1998. The cash price of the truck was $142,400 and $16,000 was spent preparing the truck for operation. During the first year of operations, the truck s oil was changed several times for a total cost of $1,000. The truck has an 8-year useful life and a $32,000 residual value; double-declining balance depreciation is being used.

What is reported on the income statement as depreciation expense for the year ended December 31, 2000?

What Is The Double Declining Depreciation Method:

The Double Declining Depreciation Method is one of the acceptable depreciation methods under GAAP. Because the Double Declining Depreciation Method has a higher initial depreciation, it is best used for assets that give most of their economic benefits if the first few years of its existence.

Answer and Explanation: 1

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Step 1: The cost of the asset is:

=142,400 +16,000

=$158,400

Step 2: The deprecation rate is:

=2/8

=25%

Step 3: The 2000 depreciation expense...

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Methods of Depreciation

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Chapter 6 / Lesson 1
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When completing financial reports, depreciation, or a loss in value, can be reported using three different methods: straight-line, double declining balance, and units of production. Learn to calculate depreciation using each of these methods.


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