g The La Salle Bus Company has decided to purchase a new bus for $95,000 with a trade-in of their old bus. The old bus has a BV of $10,000 at the time of the trade-in. The new bus will be kept for 10 years before being sold. Its estimated SV at that time is expected to be $15,000. a. Determine which asset class of the bus. b. Determine annual Straight-Line Depreciation charge'

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Business

Johanna

10 February, 19:10

g The La Salle Bus Company has decided to purchase a new bus for $95,000 with a trade-in of their old bus. The old bus has a BV of $10,000 at the time of the trade-in. The new bus will be kept for 10 years before being sold. Its estimated SV at that time is expected to be $15,000. a. Determine which asset class of the bus. b. Determine annual Straight-Line Depreciation charge'

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Kristin Bryant · Answer 1

The new bus is rolling stock asset

depreciation is $8,000

Explanation:

Rolling stock asset in the U. S is a conveyance vehicle such a buses, vans, locomotives, ferryboats and so on.

annual depreciation = (cost-salvage value) / useful life

cost of the new bus is $95,000

salvage value is $15,000

useful life is 10 years

yearly depreciation charge = ($95,000-$15,000) / 10 years

=$8,000

Note that the $10,000 trade-in value is relevant when computing the cash payable to the car dealer, it is not deducted here since it forms part of asset cost.