Prepare the depreciation tables for A. Straight Line, B. Double Declining Balance, and C. Units of Activity.
Next Journalize the purchase of the truck, the first year's depreciation expense, and the disposal of the truck. (including explanations)
Here's the data:
Purchased on January 1, 2012 for $13,000. Has an estimated residual value of $1,000.
Useful life of 5 years or 100,000 miles.
Sold on December 31st, 2013
Ans. (a). Depreciation as per Straight Line Method
= ($13,000 - $1,000) / 5 = $2,400 per year
Date | Particulars | Amt | Amt |
01-Jan-12 |
Truck To Cash |
13,000 |
13,000 |
31-Dec-12 |
Depreciation on Truck To Accumulated Depreciation |
2,400 |
2,400 |
(b). Depreciation as per Double Declining Balance Method
= $13,000 x 36.92% = $4,800
Date | Particulars | Amt | Amt |
01-Jan-12 |
Truck To Cash |
13,000 |
13,000 |
31-Dec-12 |
Depreciation on Truck To Accumulated Depreciation |
4,800 |
4,800 |
(c). Depreciation as per Units of Activity Method
= ($13,000 - $1,000) / 100,000 = $0.12 per mile
Date | Particulars | Amt | Amt |
01-Jan-12 |
Truck To Cash |
13,000 |
13,000 |
31-Dec-12 |
Depreciation on Truck*** To Accumulated Depreciation |
2,400 |
2,400 |
*** It has been assumed that the truck has been used uniformly over the period of 5 Years, i.e., 20,000 miles per year
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