Problem:
Depreciation calculation methods. Hill Co. acquired a new delivery truck at the beginning of its current fiscal year. The following information is available
cost $ 100,000
estimated useful life 6 years
estimated salvage value $ 7,000
Required:
a. Calculate depreciation expense for the first 4 years of the truck's life using:
1. Straight-line depreciation.
2. Sum-of-the-years'-digits depreciation.
3. Double-declining-balance depreciation.
b. Calculate the truck's net book value at the end of its third year of use under each depreciation method.
c. Assume that Hill Co. had no more use for the truck after the end of the third year and that at the beginning of the fourth year it had an offer from a buyer who was willing to pay $6,200 for the truck. Should the depreciation method used by Hill Co. affect the decision to sell the truck.