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Truck A is purchased on 1-1-X1 for 15,500. Straight-linedepreciation is used, with a salvage value of 1,500. Estimateduseful life is 5 years. On 12-31-X4 we are going to trade intruck A for truck B with a FMV of $18,000. Trade in allowance(FMV) for Truck A is $3,500. Answer the following:
6. How much is the annual depreciation expense fortruck A using straight line depreciation?____________________
7. What is the journal entry to record depreciation forTruck A for 12-31-X1
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Discuss how each of these potential changes would affect the relative volume of leasing versus conventional debt in the U.S. economy.
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