[moonkhan]

I am really confused to calculate the Depriciation expense for Dec, 2008. The question is like this.
In 2007, Cost of truck is $22,000, estimated life year is 5 years, and salvage value is $2000. The recorded annual straight line depreciation for December 2007 is $4000 as I recorded.
1n 2008, the truck's estimated useful life was changed from five to four years and salvage value is $2400.I need to record the annual Straight line depreciation on the truck. According to my calculations, it is $4900, but when I match the answer, it should be equal to $5,200. Can anybody help me please. I AM VERY VERY CONFUSED

[hkstroud]

The cost of the truck was $22,000. The salvage value was $2000. Expected life of truck was 5 years. That gives you a depreciation value of $20,000 to be taken over 5 years.

In 2007 you claimed $4,000 which left a balance of $16000 to be claimed.

In 2008 the salvage value increased by $400. That reduced the depreciation balance by $400 to $15,600.

The expected life truck also change from 5 years to 4. You have already claimed one year, leaving you three years to claim the remaining balance of $15,600.

$15,600 divided by 3 = $5,200

[pready]

This is a duplicate post and was previously answered by me in the other post.

[moonkhan]

Thanks for your help, but I am also confused with Calculating the loss on disposal of truck. IT SHOULD BE EQUAL TO $2300, BUT MINE IS DIFFERENT. CAN YOU PLEASE EXPLAIN HOW I CAN DO THAT. THANKS AGAIN

[pready]

What information do you have on the disposal of the truck like when was it disposed, how much did you receive for it, etc.

The basic journal entry will be:
Debit Cash if cash received for the amount
Debit Accumulated Dpreciaiton for the amount of depreciation accumulated for the truck (you may have to calculate this amount)
Credit Truck for the cost of the truck
And the difference between your debits and credits will be either a gain (credit) or a loss (debit).