Question

Coronado Towing Company purchased a tow truck for $190000 on January 1, 2016. It was originally depreciated on a straight-line years with an assumed salvage value of $36000. On December 31, 2018, before adjusting entries had been made, the company decided to change the remaining estimated life to 4 years (including 2018) and the salvage value to $4000. What was the depreciation expense for 2018? Sign Up O $18000.

Answer 1

	CALCULATION OF THE DEPRECIATION AS PER STRAIGHT LINE METHOD FOR TRUCK
	Purchase Cost of Truck	$                   190,000
	Less: Salvage Value	$                      36,000
	Net Value for Depreciation	$                   154,000
	Usefule life of the Assets (In Years )	$                              10	Years
	Depreciation per year = Value for Depreciation / 10 years =	$                      15,400
	Purchase Value =	$                   190,000
	Less Depreciation for the 2016 & 2017 ($ 15,400 X 2 year)	$                      30,800
	Book Value at the opening of 2018 =	$                   159,200
	CALCULATION OF THE DEPRECIATION AS PER STRAIGHT LINE METHOD FOR TRUCK ( REVISE )
	Opening Book value of the truck	$                   159,200
	Less: Salvage Value	$                        4,000
	Net Value for Depreciation	$                   155,200
	Usefule life of the Assets (In Years )	$                                4	Years
	Depreciation per year = Value for Depreciation / 4 years =	$                      38,800
	So, Answer = Depreciation for the year 2018 = $ 38,800