Question

# On April 1, 2018, Milgard Corp bought a delivery truck at a cost of \$20,000. The...

On April 1, 2018, Milgard Corp bought a delivery truck at a cost of \$20,000. The truck has a 5-year useful life with an estimated salvage value of \$5,000.

Required:

1. Using the straight-line method, compute the depreciation expense for December 31, 2018.
1. Using the straight-line method, compute the depreciation expense for December 31, 2019.

(c)       Using the straight-line method, what is the Accumulated Depreciation on December 31, 2018.

1. Using the straight-line method, what is the Accumulated Depreciation on December 31, 2019.
1. Using the straight-line method, what is the Book Value on December 31, 2019.

(f)        Using the double-declining method, compute the depreciation expense for December 31, 2018.

1. Using the double-declining method, compute the depreciation expense for December 31, 2019.
1. Using the double-declining method, what is the Accumulated Depreciation on December 31, 2018.

(i)         Using the double-declining method, what is the Accumulated Depreciation on December 31, 2019.

(j)         Using the double-declining method, what is the Book Value on December 31, 2019.

(k)        On December 31, 2019, the truck was sold for \$13,000 cash. Assuming that the straight-line method is used for truck depreciation, prepare the journal entry for the truck sale.

(l)         On December 31, 2019, the truck was sold for \$14,000 cash. Assuming that the double-declining method is used for truck depreciation, prepare the journal entry for the truck sale.

USING STRAIGHT LINE METHOD OF DEPRECIATION

Formula: depreciation per annum = (cost - salvage value)/useful life

= (20000 - 5000)/5

= \$3000

(a) depreciation for Dec 31, 2018 = nine month's depreciation expenses

= (3000x9)/12

= \$2250

(b) depreciation for Dec 31, 2019 = 3000

(c) accumulated depreciation on Dec 31, 2018 = \$2250

(d) accumulated depreciation on Dec 31, 2018 = \$2250 + \$3000 = \$5250

(e) book value of asset on Dec 31, 2019 = cost - accumulated depreciation

= \$20000 - \$5250 = \$14750

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