On May 2, Bill purchased a used truck for $5,000 to use for his business. He estimates a trade-in value of $500 at the end of the estimated five-year life of the truck.
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Meaning of accumulated depreciation- its the total amount of plant asset that has been put aside or allocated to the depreciation expense since the time it was put in service.
In this particular case , the accumulated depreciation will be
5000-500....................we assume 500 to be the book value of the truck
The trade in value does not reflect the market value of the truck but just ban estimation on the technique used.
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