Question

Greenland Company purchased a delivery van for $ 65 comma 000 on January 1. The van has an estimated 4​-year life with a residual value of $ 7 comma 000. What would the depreciation expense for this van be in the first year if Greenland uses the​ straight-line method?

Answer 1

The depreciation expense for this van be in the first year if Greenland uses the​ straight-line method is $14,500

Step-by-step explanation:

The depreciation expense under the straight-line method is shown below:

= (Original cost - residual value) ÷ estimated life in years

= ($65,000 - $7,000) ÷ 4 years

= $14,500

In the straight-line method, the depreciation expense would remain the same over its useful life i.e 4 years

The original cost is the purchase price of the delivery van.