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.
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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