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How is the term "depreciation" used in a news story about the resale value of electric cars?

How is the term "depreciation" used in a news story about the resale value of electric cars?. Original blog posting (January 27, 2014). Recent headline “ Depreciation hits electric cars hard”.

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How is the term "depreciation" used in a news story about the resale value of electric cars?

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  1. How is the term "depreciation" used in a news story about the resale value of electric cars? Original blog posting (January 27, 2014)

  2. Recent headline “ Depreciation hits electric cars hard” • Example: A Ford Focus Electric auto will be worth about 20% of its initial list price after five years, while the non-electric version will be worth about 36% of its initial value

  3. Question 1 What is the definition of “depreciation” from an accounting standpoint?

  4. Question 2 Would the accounting depreciation for a Ford Focus gas-engine automobile differ from a comparable Ford Focus Electric automobile? Why or why not?

  5. Question 3 The story also refers to “residual value.”  What is residual value? Does this “residual value” referred to by USA Today have the same meaning as the “residual value” used in accounting depreciation calculations? Explain.

  6. Question Recap • What is the definition of “depreciation” from an accounting standpoint? • Would the accounting depreciation for a Ford Focus gas-engine automobile differ from a comparable Ford Focus Electric automobile? Why or why not? • The story also refers to “residual value.”  What is residual value? Does this “residual value” referred to by USA Today have the same meaning as the “residual value” used in accounting depreciation calculations? Explain.

  7. For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at http://accountingintheheadlines.com/Related video resources can be found at http://www.youtube.com/user/accountingheadlinesQuestions or comments? Contact Dr. Wendy Tietz at wtietz@kent.edu

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