On December 31, year 0, your company bought a delivery truck for $45,000. The expected useful...

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Accounting

On December 31, year 0, your company bought a delivery truck for$45,000. The expected useful life is 4 years, with an expectedsalvage value of $15,000. On January 1, year 3, your company soldthe asset. Provide the financial statement effects of the saleunder the different sale prices below.
Sale price
PP&E, Gross
Accumulated Depreciation
NI (pretax)
CFO (ignore taxes)
CFI
$29,850
$30,000
$30,670
True or false: If the salvage value is revised upwards, firmsmust restate prior periods’ financial statements to update bookvalues and depreciation amounts
True or false: If a firm, by assumption, changes the usefullife of an asset, depreciation in the future will be different fromwhat it would have been absent the change in assumption.

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3.8 Ratings (570 Votes)

Annual depreciation Cost price Salvage valueUseful life 45000 150004 7500 Hence accumulated depreciation after 2 years 7500x 2 15000 PPE net after 2 years Cost price Accumulated depreciation 45000 15000 30000 Sale price PPE Gross Accumulated See Answer

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Sale price	PP&E, Gross	Accumulated Depreciation	NI (pretax)	CFO (ignore taxes)	CFI
$29,850
$30,000
$30,670