Montezuma Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3114 and is expected to be driven for eight years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After three years of recording depreciation, Montezuma determines that the delivery truck will only be useful for another three years and that the salvage value will increase to $4114. Determine the depreciation expense for the final three years of the asset's life, and create the journal entry for year four.

Montezuma Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3114 and is expected to be driven for eight years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After three years of recording depreciation, Montezuma determines that the delivery truck will only be useful for another three years and that the salvage value will increase to $4114. Determine the depreciation expense for the final three years of the asset's life, and create the journal entry for year four.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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