Depreciation calculation methods
Depreciation calculation methods. Kleener Co. acquired a new
delivery truck at the beginning of its current fiscal year. The truck cost
$26,000 and has an estimated useful life of four years and an estimated salvage
value of $4,000.
Required:
a. Calculate depreciation expense for each year of the
truck’s life using:
1. Straight~line
depreciation.
2. Sum-of-the-years’-digits
depreciation.
3. Double~declining-balance
depreciation.
b. Calculate
the truck’s net book value at the end of its third year of use under each
depreciation method.
c. Assume
that Kleener Co. had no more use for the truck after the end of the third year
and that at the beginning of the fourth year it had an offer from a buyer who
was willing to pay $6,200 for the truck. Should the depreciation method used by
Kleener Co. affect the decision to sell the truck?
