Question

On October 1, 2019, 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, 2019, will be $________.

Answer 1

3,250

Step-by-step explanation:

Cost of truck = $42,000

Salvage value = $3,000

Value to be depreciated = $42,000 - $3,000

= $39,000

If the asset has a useful life of 3 years,

Yearly depreciation = $39,000/3

= $13,000

For 2019, the asset is used between October 1 and December 31 (3 months)

Therefore,

Depreciation expense for the year ending December 31, 2019

= (3/12) × $13,000

=$3,250