A New Truck Costing $50,000 with a Residual Value of $4,000

question 82

Multiple Choice

A new truck costing $50,000 with a residual value of $4,000 has an estimated useful life of five years. Using the declining-balance method at twice the straight-line rate, the depreciation expense in year 2 is:

• A)$20,000
• B)$12,000
• C)$18,000
• D)$7,200
• E)None of these

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Definitions:

Merchandise Inventory

The total value of all merchandise that a retailer, wholesaler, or distributor has on hand that is available for sale.

Cash Balance

The amount of cash held by a company at a given moment, reflecting its immediate liquidity.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company; this amount includes the cost of the materials and labor directly used to create the product.

Merchandise Inventory

Goods available for sale to customers, which can include both purchased products and those manufactured by the company.