KK Company bought a delivery truck for $62,000 on January 1,2009. They installed

Question

KK Company bought a delivery truck for $62,000 on January 1,2009. They installed a rear hydraulic lift for $8,000 andpaid sales tax of $3,000. In addition, KK paid $2,400 for aone-year insurance policy and $500 for registration fees. They estimate the useful life of the truck to be 10 years and itsresidual value to be $8,000. show work how do i?

a. IfKK uses the straight-line method of depreciation, what is thedepreciation expense and book value at the end of 2010?   

           B)   $6,500 and $60,000

  b) If KK uses the double declining-balance method, how muchis depreciation expense in 2010?

           A) $11,680

c)      If KK uses the units-of-production method when theyhave estimated the truck will be driven 500,000 miles over itslife, what is depreciation expense in 2010 when the truck isdriven 60,000 miles?

           C)   $7,800

What amountwould be capitalized as the acquisition cost of the truck onKK’s books?

           A) $73,000

e) What amounts connected to the truck's acquisition should beexpensed during 2009 other than depreciation for theyear?

           D) $2,900

Explanation / Answer

a. answer is $6500 Depreciation expense       = ${(62000 + $8000 + $3000) - $8000} / 10 2010       = $6,500 b. Depreciation rate = 2* 1/10 = 20% Depreciation expense     2009        = $73000 * 20%        = $14,600 2010        = ($73000 -$14600) * 20%        = $11,680 c Acquisition cost of truck   = $62000 + $8000 + $3000       = $73,000 d. Expensed 2009       = $2400 (insurance) + $400(regeistration)       = $2,900

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