Question

On October 1, 2015, Illini Company purchased a truck for $42,000. The truck is expected to have a salvage value of $3,000 at the end of its 3-year useful life. If the company uses the straight-line method, the depreciation expense recorded during the year ending December 31, 2015, will be _____.

Answer 1

depreciation recorded by December 31, 2015=$4,333.33

Step-by-step explanation:

The expression for the depreciable cost is as follows;

depreciable cost=Acquisition cost-salvage value

where;

acquisition cost=$42,000

residual value=$3,000

replacing;

depreciable cost=42,000-3,000=$39,000

depreciable cost=$39,000

The annual depreciation can be expressed as;

annual depreciation=depreciable cost/estimated useful life

where;

depreciable cost=$39,000

estimated useful life=3 years

replacing;

annual depreciation=39,000/3=13,000

annual depreciation=$13,000

depreciation between October 1 and December 31=(4/12)×13,000=$4,333.33

depreciation recorded by December 31, 2015=$4,333.33