Question

# 1) Cambridge Company purchased a truck on January 1, 2018. Cambridge paid \$21,000 for the truck....

1) Cambridge Company purchased a truck on January 1, 2018. Cambridge paid \$21,000 for the truck. The truck is expected to have a \$3,000 residual value and a 5-year life. Cambridge has a December 31 fiscal year end. Using the double-declining balance method, how much is the 2019 depreciation expense? (Enter only whole dollar values.) Hint: what is the year 2 depreciation amount?

2) Cambridge Company purchased a truck on January 1, 2018. Cambridge paid \$16,000 for the truck. The truck is expected to have a \$3,000 residual value and a 7-year life. Cambridge has a December 31 fiscal year end. Using the straight-line method, how much is the 2019 depreciation expense? (Enter only whole dollar values.)

1.Annual depreciation rate as per straight line method=100%/5

=20%/year

Hence depreciation as per double decline=2*Annual depreciation rate as per straight line method*Beginning value of each period

 Year Beginning value Depreciation Ending value 2018 21000 (2*20%*21000)=8400 (21000-8400)=12600 2019 12600 (2*20%*12600)=\$5040

Hence 2019 depreciation expense=\$5040

2.Annual Depreciation=(Cost-Residual value)/Useful Life

=(16000-3000)/7

=\$1857.14286/year

Hence 2019 depreciation expense=\$1857(Approx)

#### Earn Coins

Coins can be redeemed for fabulous gifts.