# 26. D-Signs purchased a new de

26. D-Signs purchased a new delivery truck on June 30, 2015, for\$15,150 and a \$5,000 delivery fee. The company estimated the truckwould be used for 15 years with a \$1,200 residual value. At thebeginning of 2018, D-Signs revises its estimate of the useful lifeto 12 total years with a \$1,500 residual value. If the company usesthe straight-line method to calculate depreciation expense,determine the following:

a. Accumulated depreciation to date (round to the nearest wholedollar)

b. Book value of the truck at the beginning of 2018

c. Revised annual depreciation expense (round to the nearestwhole dollar)

• All working forms part of the answer
• Requirement ‘a’
 A Cost \$                 20,150.00 B Residual Value \$                   1,200.00 C=A – B Depreciable base \$                 18,950.00 D Life [in years] 15 E=C/D Annual SLM depreciation \$                   1,263.33 F = E x 6/12 2015’s 6 month depreciation \$                       631.67 G = E 2016 annual depreciation \$                   1,263.33 H = E 2017 annual depreciation \$                   1,263.33 I F+G+H Accumulated Depreciation to date \$                   3,158.33 = Answer

Accumulated Depreciation to Date = \$3,158

• Requirement ‘b’
 A Original Cost \$         20,150.00 B Accumulated Depreciation to date \$            3,158.00 C = A – B Book Value of the truck at the beginning of2018 \$         16,992.00

• Requirement ‘c’
 A Original Cost \$         20,150.00 B Accumulated Depreciation to date \$            3,158.00 C = A – B Book Value \$         16,992.00 D New Salvage value \$            1,500.00 E = C – D New Depreciable base \$         15,492.00 H = 12 years – 2.5 years expired New remaining life 9.5 I = E/H Revised Annual Depreciation expense \$            1,630.74

Revised Annual Depreciation expense =\$ 1,631

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