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# Compute Press Corporation Depreciation

3. Press Corporation purchased a truck for \$40,000. The company expected the truck to last four years or 100,000 miles, with an estimated residual value of \$4,000 at the end of that time. During the first year, the truck was drive 27,500 miles.
Compute the depreciation for the first year under each of the following methods: (a) straight-line, (b) units of production, (c) double-declining-balance.

4. Up to the date of a fire that completely destroyed all of Singer's inventory, Singer had sales of \$2,000,000 and purchases of \$1,800,000. The cost of beginning inventory was \$140,000 and the company's typical gross profit was 40 percent.

Using the gross profit method, estimate Singer's inventory loss from the fire.

#### Solution Preview

3. Press Corporation purchased a truck for \$40,000. The company expected the truck to last four years or 100,000 miles, with an estimated residual value of \$4,000 at the end of that time. During the first year, the truck was drive 27,500 miles.
Compute the depreciation for the first year under each of the following methods: (a) straight-line, (b) units of production, (c) double-declining-balance.