Question

Straight-Line Depreciation A small delivery truck was purchased on January 1 at a cost of $21,920. It has an estimated useful life of four years and an estimated salvage value of $4,680. Prepare a depreciation schedule showing the depreciation expense, accumulated depreciation, and book value for each year under the straight-line method.

Answer 1

Rate of depreciation per year is 4310 $/ year and the depreciation schedule is given below.

Explanation:

According to the question,

since, it is straight-line depreciation,

rate of depreciation per year =
`(21920 - 4680)/(4)` $/year

= 4310 $/ year

So we can prepare the following table. (year = 0 for the base period)

Year Depreciation Accumulated Book value

expense depreciation

( in $) (in $) (in $)

0 0 0 21920

1 4310 4310 17610

2 4310 8620 13300

3 4310 12930 8990

4 4310 17240 4680