12.On January 1, 2019, Brazeau Transport purchased a $165,000 truck for hauling cattle across the border. Brazeau plans on driving the truck for four years, or 450,000 kilometres. The expected residual value for the truck is $35,000. On June 30, 2022, after driving the truck 44,000 kilometres, the truck had an accident on the highway and was totalled. The insurance proceeds for the truck were $42,000 cash. Calculate and record the amortization expense for the truck for the year 2019 using the straight-line method.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
12.On January 1, 2019, Brazeau Transport purchased a $165,000 truck for hauling cattle across the border. Brazeau plans on driving the truck for four years, or 450,000 kilometres. The expected residual value for the truck is $35,000. On June 30, 2022, after driving the truck 44,000 kilometres, the truck had an accident on the highway and was totalled. The insurance proceeds for the truck were $42,000 cash.
Calculate and record the amortization expense for the truck for the year 2019 using the straight-line method.
Step by step
Solved in 2 steps
