Would this be accumulated depriciation?

User Generated

FAF108349610721084622808

Business Finance

Description

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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Explanation & Answer

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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

$4500. 

 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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Anonymous
Excellent resource! Really helped me get the gist of things.

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