prepare a depreciation schedule using a straight line method
Under straight line method of depreciation, the amount to be depreciated for each year remains same. | ||||
Formula to calculate depreciation expense under straight line method | ||||
Depreciation expense | (Cost - Salvage value)/No of useful life | |||
Calculation of cost of vehicle | ||||
Purchase price | $16,000 | |||
Add: Repaint expense | $7,000 | |||
Add: Cost for roof rack and hitch | $3,000 | |||
Total cost of vehicle | $26,000 | |||
Insurance purchase is expensed to income statement and not capitalized. | ||||
Painting, roof rack and hitch increases the future benefit of vehicle and is therefore capitalized. | ||||
The basic maintenance expense is expensed to income statement and not capitalized. | ||||
Depreciation expense per year | (26000-6500)/5 | |||
Depreciation expense per year | $3,900 | |||
Vehicle is purchased on 01st July 2022 and thus only 6 months depreciation would be charged in 2022. | ||||
Six month depreciation | $1,950 | 3900*(6/12) | ||
Depreciation schedule using straight line method is shown below | ||||
GREAT ADVENTURES | ||||
End of Year amounts | ||||
Year | Depreciation expense | Accumulated depreciation | Book value | |
2022 | $1,950 | $1,950 | $24,050 | |
2023 | $3,900 | $5,850 | $20,150 | |
2024 | $3,900 | $9,750 | $16,250 | |
2025 | $3,900 | $13,650 | $12,350 | |
2026 | $3,900 | $17,550 | $8,450 | |
2027 | $1,950 | $19,500 | $6,500 | |
Total | $19,500 | |||
Accumulated depreciation = Current year depreciation plus previous year accumulated depreciation balance. | ||||
Book value | Cost - Accumulated depreciation | |||
At the end of 5th years the book value is equal to salvage value. | ||||
prepare a depreciation schedule using a straight line method Great Adventures Problem AP7-1 Part 3 3....
Required information Great Adventures Problem AP7-1 [The following information applies to the questions displayed below.) Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 1, 2022, for $12,600. They expect to use the Suburban for five years and then sell the vehicle for $4,800. The following expenditures related to the vehicle were also made on July 1, 2022: • The company pays $1,950 to...
Required information Great Adventures Problem AP7-1 The following information applies to the questions displayed below.] Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 1, 2022, for $15,200. They expect to use the Suburban for five years and then sell the vehicle for $6,100o. The following expenditures related to the vehicle were also made on July 1, 2022: The company pays $2,600 to GEICO...
! Required information Great Adventures Problem AP7-1 The following information applies to the questions displayed below. Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 1, 2022, for $13,200. They expect to use the Suburban for five years and then sell the vehicle for $5,100. The following expenditures related to the vehicle were also made on July 1, 2022: The company pays $2,100 to...
Great Adventures Problem AP7-1 [The following information applies to the questions displayed below.) Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 4.2022. for $12,400. They expect to use the Suburban for five years and then sell the vehicle for $4,700. The following expenditures related to the vehicle were also made on July 1, 2022 • The company pays $1,900 to GEICO for a...
Required information Great Adventures Problem AP7-1 [The following information applies to the questions displayed below.) Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 1, 2022, for $15,200. They expect to use the Suburban for five years and then sell the vehicle for $6,100. The following expenditures related to the vehicle were also made on July 1, 2022: • The company pays $2,600 to...
Required information Great Adventures Problem AP7-1 [The following information applies to the questions displayed below.] Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 1, 2022, for $16,000. They expect to use the Suburban for five years and then sell the vehicle for $6,500. The following expenditures related to the vehicle were also made on July 1, 2022: The company pays $2,800 to GEICO...
Required Information Great Adventures Problem AP7-1 The following information applies to the questions displayed below) Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 1, 2022 for $12,400. They expect to use the Suburban for five years and then sell the vehicle for $4,700. The following expenditures related to the vehicle were also made on July 1, 2022 • The company pays $1,900 to...
Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 1, 2022, for $12,000. They expect to use the Suburban for five years and then sell the vehicle for $4,500. The following expenditures related to the vehicle were also made on July 1, 2022: The company pays $1,800 to GEICO for a one-year insurance policy. The company spends an extra $3,000 to repaint the vehicle,...
Required information Great Adventures Problem AP7-1 (The following information applies to the questions displayed below.) Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 1, 2022, for $15,200. They expect to use the Suburban for five years and then sell the vehicle for $6,100. The following expenditures related to the vehicle were also made on July 1, 2022: • The company pays $2,600 to...
Tony and Suzie see the need for a rugged all-terrain vehicle to transport participants and supplies. They decide to purchase a used Suburban on July 1, 2022, for $12,600. They expect to use the Suburban for five years and then sell the vehicle for $4,800. The following expenditures related to the vehicle were also made on July 1, 2022 • The company pays $1,950 to GEICO for a one year insurance policy. • The company spends an extra $3,600 to...