a truck is purchased for $22,500 and has a resale value of $16,500 after a useful life of 5 years. using a…
a truck is purchased for $22,500 and has a resale value of $16,500 after a useful life of 5 years. using a book value depreciation chart, calculate the number of years until the book value of the truck is $18,900. ? years
Answer
Explanation:
Step1: Calculate annual depreciation
The total depreciation over 5 years is the purchase - price minus the resale value. So, the total depreciation $D = 22500 - 16500=6000$. The annual depreciation $d=\frac{D}{5}=\frac{6000}{5} = 1200$.
Step2: Calculate the amount of depreciation to reach the target book - value
The amount of depreciation from the purchase price to the target book - value is $22500 - 18900 = 3600$.
Step3: Calculate the number of years
Let the number of years be $n$. Since the annual depreciation is $d = 1200$, and the total depreciation is 3600, we use the formula $n=\frac{3600}{1200}$. $n = 3$
Answer:
3