Clifford Delivery Company purchased a new delivery truck for $45,000 on April 1, 2019. The truck is expected to have a service life of 5 years or 120,000 miles and a residual value of $3,000. The truck was driven 8,000 miles in 2019 and 14,000 miles in 2020. Clifford computes depreciation expense to the nearest whole month. 1. Compute depreciation expense for 2019 and 2020 using the following methods: (Round your answers to the nearest dollar.) a. Straight-line method 2019 $ 2020 $ b. Sum-of-the-years'-digits method 2019 $ 2020 $
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Clifford Delivery Company purchased a new delivery truck for $45,000 on April 1, 2019. The truck is expected to have
a service life of 5 years or 120,000 miles and a residual value of $3,000. The truck was driven 8,000 miles in 2019
and 14,000 miles in 2020. Clifford computes
1. Compute depreciation expense for 2019 and 2020 using the following methods: (Round your answers to the
nearest dollar.)
a. Straight-line method
2019 $
2020 $
b. Sum-of-the-years'-digits method
2019 $
2020 $
c. Double-declining-balance method
2019 $
2020 $
d. Activity method
2019 $
2020 $
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