Cilia cruz completed the fo0llowing transaction: 10/1/10 Purchased a new truck f
ID: 2471421 • Letter: C
Question
Cilia cruz completed the fo0llowing transaction: 10/1/10 Purchased a new truck for $106,600 plus $6,400 in sales tax in addition the truck cost an additional $70 for a flat to be repaired and $80 for gas . Salvage value is $20,000 and had a 5 year life Additional information: The truck was estimated to go 100,000 miles in year 2010 traveled 30,000 miles and year 2011 traveled 15,000 miles. Required: a. Depreciation for year 2010 and 2011 using straight line, unit of production and double declining. b. On June 30, 2011, Cilia sold the truck for $80,000. Using straight line deprecation , what is the gain or loss? On January 8, the end of the first weekly pay period of the year
Explanation / Answer
Cost of new truck Purcahses of new truck $106,600 Sales tax 6400 Cost of new truck $113,000 Ans a Truck Depreciation method=Straight Line Method $113000-20000/5 18600 2010 4650 3 momths 2013 9300 6months Total 13950 Ans a (2) Truck Depreciation method=Double Declining method 200%*Straight Line Depreciation Rate* book value at the beginning of the year Straight Line Depreciation rate= 100%/5= 20% Year Net Book Value at beginning Depreciation 200%*20%*Beginning NBV Net Book Value at the end Calculation of Depriciation 2010 (3 months) 113000 11300 101700 113000*2*.2*3/12 2011 (six months) 101700 20340 81360 101700*2*0.2*1/2 yr Total 31640 Truck ans a© Unit of Activity Method Depreciation=Actual No.of units or hours /Total no. of units or expected hours to be produced*(Cost-Salvage value) For accumulated depreciation we can add all the actual hours used in 3 years and than calculate $113000-20000/100000 0.93 per unit Depreciation 2010 30000 0.93 27900 2011 15000 0.93 13950 41850 Ans Using SLM method Ans b Sale price 80000 Less: Book Value (113000-13950) $99,050 Loss ($19,050) Ans