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Hadicko Company purchased a delivery truck on January 1, 2019
Hadicko Company purchased a delivery truck on January 1, 2019. Cost of Truck $35,000 Expected residual value $10,000 Estimated useful life in years 5 years Straight-line depreciation rate 20% Estimated useful life in miles 100,000 miles Miles operated in first year 18.000 miles Instructions a.Compute depreciation expense and prepare journal entry using the straight-line method for the first year b.Determine the depreciation expense per mlle compute depreciation expense and prepare Journal entry using the units-of-activity method for the first year. c.Compute depreciation expense and prepare Journal entry using the declining-balance method for the test your A-BI !!! III 2? >
Expert Solution
1)Depreciation Expense = (35000 - 10000) x 20% = 5000
Entry Will be
Depreciation Expense A/c Dr ....................5000
To Accumualated Depreciation A/c ...............................5000
2
Depreciation Rate = (35000 - 10000 ) / 100000 = 0.25
Depreciation Expense will be = 0.25 x 18000 = 4500
Entry Will be
Depreciation Expense A/c Dr ....................4500
To Accumualated Depreciation A/c ...............................4500
3
Depreciaton Expense will be 35000 x 40% = 14000
Here we will doublr the depreciation rate of Straight Line method
Entry Will be
Depreciation Expense A/c Dr ....................14000
To Accumualated Depreciation A/c ...............................14000
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