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Unformatted text preview: 54,000 = 21,600 57,600 32,400 Year 3 40% 32,400 = 12,960 70,560 19,440 Year 4 40% 19,440 = 7,776 78,336 11,664 At the end of an asset's useful life, the asset's net book value should equal its salvage value. Although 40% of $11,664 is $4,666, the truck depreciates only $1,664 during year five because net book value must never drop below salvage value. If the truck's salvage value were $5,000, depreciation expense during year five would have been $6,664. If the truck's salvage value were $20,000, then depreciation expense would have been limited to $12,400 during year three, and no depreciation expense would be recorded during year four or year five....
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- Fall '10