Question

On 1/1/16, a company purchases a truck at a cost of 100,000. The truck has a salvage value of 5,000, and a useful life of 10 years or 200,000 miles. The truck is driven for 10,000 miles during 2016. What is the 2016 depreciation expense using the Straight Line method?

Answer 1

The 2016 depreciation expense using the Straight Line method is $9,500.

Step-by-step explanation:

The Straight Line method is a depreciation method used to allocate the cost of an asset evenly over its useful life. To calculate the depreciation expense using this method, we subtract the salvage value from the initial cost and divide the result by the useful life in years. In this case, the initial cost is $100,000, the salvage value is $5,000, and the useful life is 10 years. Therefore, the annual depreciation expense would be ($100,000 - $5,000) / 10 = $9,500.