Cork Oak Corporation purchased a heavy-duty truck (not considered a passenger automobile for purposes of the listed property and
luxury automobile limitations) on May 1, 2018 for use in its business. The truck, with a cost basis of $24,000, has a 5-year estimated life. It also is 5-year recovery property. How much depreciation should be taken on the truck for the 2018 calendar tax year using the conventional (for financial accounting purposes) straight-line depreciation method?
Answer: Cost of truck / expected useful life= 24,000 / (5 year × 12 months)= 400 dollar per month 400×8= 3200 dollar
Explanation:
Considering no salvage value of the truck at the end of the 5-year period and need for 8 month period of depreciation (from May 1 till the end of the year) we use formula of straight line method: Cost of truck / expected useful life= 24,000 / (5 year × 12 months)= 400 dollar per month. And in order to find taken accumulated depreciation for 8 months of 2018: 400×8= 3200 dollar. At the end of 2018 we should write off 3200 dollar from the value of truck.
Prepaid Insurance is the insurance amount paid in advance, so that company has a receivable because amount is not due yet. It will charged to expense account with the passage of time. Notes Payable, Unearned Revenue, Owner Withdrawals are classified as liabilities and capital contra accounts. So correct option is C. Prepaid Insurance.
Answer:To allocate scarce goods and resources, a market economy uses non-price rationing preferential treatment price rationing . this means that individuals will get the goods and services if they have the ability to pay meet the government's requirements stand in line at the store.
