Question

On January​ 1, 2015 ​Terry's Towing Service owned 10 tow trucks valued at ​$700 comma 000. During 2015​, ​Terry's bought 10 new trucks for a total of ​$750 comma 000. At the end of 2015​, the market value of all the​ firm's trucks was ​$1 comma 100 comma 000. What was​ Terry's gross​ investment? Calculate​ Terry's depreciation, and net investment.

Answer 1

Answer:

Explanation:

The calculation of Terry’s gross investment, depreciation, and net investment are as follows:

The depreciation is calculated as follows:

Terry’s Depreciation = (700,000+750,000-1,100,000)

= $3,50,000

Total gross investment of Terry’s towing service for both the years is  

700,000+750,000 = $14,50,000

Net investment = Gross investment – depreciation

Gross investment = $750,000

Depreciation = $3,50,000

Therefore, net investment of Terry is = $4,00,000.