Question

On January 1, 2019 Jeacle Corporation acquired a vehicle for $44,000. The estimated life of the vehicle is 8 years or 260,000 kilometers. The estimated residual value is $4,000. If Jeacle uses the straight-line method of depreciation, what will be the debit to Depreciation expense for the year ended December 31,2020, during which period the vehicle was driven 28,500 kilometers?

Select one:
a. $5,000
b. $5,500
c. $8,069
d. $4,823

Answer 1

The depreciation expense for the year ended December 31, 2020, for Jeacle Corporation using the straight-line method is $5,000. This is calculated by subtracting the residual value from the cost and dividing by the useful life of the vehicle.

Step-by-step explanation:

The student has asked how to calculate the depreciation expense for a vehicle using the straight-line method for the year ended December 31, 2020. To determine the annual depreciation expense, subtract the estimated residual value from the cost of the vehicle and then divide by the estimated useful life of the vehicle.

Cost of the Vehicle: $44,000
Estimated Residual Value: $4,000
Estimated Useful Life: 8 years

Annual Depreciation = (Cost of the Vehicle - Estimated Residual Value) / Estimated Useful Life
Annual Depreciation = ($44,000 - $4,000) / 8
Annual Depreciation = $40,000 / 8
Annual Depreciation = $5,000

Therefore, the depreciation expense for the year is $5,000, which is option (a).