Question

Heavy general purpose trucks are often used in pipeline operations. They are built to hold up when carrying or pulling substantial loads, and yet still be suitable for regular highway use. A new truck with appropriate options is purchased for $47,000. It is estimated to have a useful life of 5 years and a salvage value of $2,900 at that time.

Required:
Develop a table showing the depreciation.

Answer 1

Answer:

Results are below.

Step-by-step explanation:

Giving the following information:

Purchase price=  $47,000  

Salvage value= $2,900  

Useful life= 5 years

To calculate the annual depreciation, we need to use the following formula:

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (47,000 - 2,900) / 5= $8,820

The accumulated depreciation is calculated as follow:

Accumulated depreciation= years of depreciation*annual depreciation

For year 4:

Accumulated depreciation= 8,820*4= $35,280

Finally, the book value is:

Book value= purchase price - accumulated depreciation

Year Annual depreciation Accumulated depreciation Book value

1                 8820                                8820                  38180

2                 8820                                17640                  29360

3                 8820                                26460                  20540

4                 8820                                      35280                 11720

5                 8820                                 44100                    2900