SBD Decided to Use Group Amortization for Its New Fleet

question 116

Essay

SBD decided to use group amortization for its new fleet of 10 panel delivery trucks. The trucks were purchased on January 1, 2013 at a cost of $12,000 each. The estimated useful life was 5 years and the estimated residual value was 10 percent of cost. Assume straight-line group amortization is used. SBD has a December 31 year-end and only accounts for amortization at year-end.
(a) At the end of 2013, amortization expense should be recorded in the amount of $____________________.
During 2014, three transactions occurred affecting the trucks:
(1) One truck was wrecked and the only recovery was $1,000 received from the salvage yard.
(2) Ordinary repair expenditures amounted to $700.
(3) A new truck was purchased at a cost of $12,200 on December 26.
(b) At the end of 2014, amortization expense should be recorded in the amount of $_____________________.

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Definitions:

Wrongful Discharge

The termination of an employee's contract or employment without legal justification or in violation of the terms of the contract or employment laws.

Age Discrimination

Unfair treatment or bias against individuals or groups based on their age, often seen in employment practices.

Merit

The quality of being particularly good or worthy, especially so as to deserve praise or reward.

Demographic Attributes

Characteristics of populations, such as age, race, gender, income level, and educational attainment, used in various analyses including market research and sociological studies.