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torisob [31]
3 years ago
15

A new truck is purchased on January 1, 20X6. The truck cost $10,000, has a 5-year life, and a $2,000 residual value. Given a Dec

ember 31 year-end, and use of the double-declining balance method, how much is 20X9 depreciation expense?
Business
1 answer:
Elena-2011 [213]3 years ago
4 0

Answer:

20X9 depreciation expense is $160

Explanation:

Under the straight-line method, useful life is 5 years, so the asset's annual depreciation will be 20%.

Under the double-declining-balance method the 20% straight line rate is doubled to 40% - multiplied times the Depreciable cost's book value at the beginning of the year.

In 20X6, depreciation expense = 40% x $10,000 = $4,000

At the beginning of the year 20X7, the truck cost's book value is $10,000-$4,000 = $6,000

In 20X7, depreciation expense = 40% x $6,000 = $2,400

In 20X8, depreciation expense = 40% x ($10,000 - $4,000 - $2,400) = $1,440

Accumulated depreciation at December 31 20X8 = $4,000 + $2,400 + $1,440 = $7,840

Book value at December 31 20X8 = $10,000 - $4,000 - $2,400 - $1,440 = $2,160

In 20X9, depreciation expense = $10,000 - $2,000 - $7,840 = $160

The 20X9 depreciation expense was $160 which is less than the actual $864 (40% of $2,160). It was done to keep the residual value as estimated ($2,000)

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Cost Leadership - target showcase exceptionally broad, point is to have the most minimal cost. Items not specific, attempt to speak to shoppers because of their low costs.  

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Quality and cost of existing items  

Areas specific..near Malls , schools , workplaces and so forth.  

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Economists believe that the economic growth of a country determines the standard of living of its people over the long term which is why measures such as GDP per capita exist.

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