1/5/2024 0 Comments Residual value of a carThe company then uses this amount to determine the truck’s official residual value, depreciating only the $76,000 ($100,000 – $24,000) portion of the truck’s cost that will be used throughout the asset’s expected five-year life. Based on market prices of similar vehicles, a reasonable residual value would be $24,000 at that level of usage. A company invests $100,000 in a truck driven 75,000 miles during the next five years.The printing machinery’s scrap value is thus estimated to be $2,900 ($3000-$200). Furthermore, the cost of ordering of the machinery is $200 that includes the expense of transferring the machine to the junkyard. By the completion of its useful life, it should be able to be sold for $3000 as scrap metal at a dumping place. The printing equipment costs $20,000, and its projected service life is ten years, according to the manufacturer. Consider the example of printing equipment as an example.Related article Accounting Entries for Depreciation Expenses (With Example) Residual Value Examples As a result, this technique rarely works until the policy-constraint values are set at a conventional level on purpose. Although the policy-derived value may be greater than the market rate, this technique is not justified because it saves corporation money on depreciation.
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