Yoshi Company completed the following transactions and events involving its deli
ID: 2754481 • Letter: Y
Question
Yoshi Company completed the following transactions and events involving its delivery trucks.
Paid $23,515 cash plus $1,785 in sales tax for a new delivery truck estimated to have a five-year life and a $2,450 salvage value. Delivery truck costs are recorded in the Trucks account.
Due to new information obtained earlier in the year, the truck’s estimated useful life was changed from five to four years, and the estimated salvage value was increased to $2,700. Recorded annual straight-line depreciation on the truck.
Recorded annual straight-line depreciation on the truck.
Sold the truck for $5,600 cash.
Yoshi Company completed the following transactions and events involving its delivery trucks.
Required: Calculate depreciation for year 2015 Total cost Less accumulated depreciation (from 2014) Book value Less revised salvage value Remaining cost to be depreciated Years of life remaining Total depreciation for 2015 25,300 3,480 18,000 2,400 15,600 5,200Explanation / Answer
2014 2015 Total Cost $23,515 $23,515 Sales tax $1,785 $1,785 Total value $25,300 $25,300 Less salvage value $2,450 $2,700 Net value of Truck $22,850 $22,600 Useful years 5 4 Depreciation per year $4,570 $5,650 Calculation of depreciation for 2015 Depreciation recorded for 2014 $4,570 Actual depreciation for 2014 $5,650 Gap in depreciation of 2014 booked in 2015 $1,080 (+) Actual depreciation of 2015 $5,650 Total depreciation of 2015 $6,730 Calculation of Book value and gain / Loss for 2016 Depreciation for 2014 $4,570 Depreciation for 2015 $6,730 Depreciation for 2016 $5,650 Accumulated depreciation till Dec 2016 $16,950 Cost of the truck $25,300 Book value of the truck on Dec 31, 2016 $8,350 Sale value of the truck $5,600 Loss on sale of Truck on 2016 ($2,750)
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