Final answer:
The useful life of the truck is calculated using the straight-line depreciation method. After determining the total amount to be depreciated as $36,000 and the annual depreciation at $7,200, the useful life is found to be 5 years.
Step-by-step explanation:
The question revolves around calculating the useful life of a truck using the straight-line depreciation method. The formula for straight-line depreciation is (Cost of the asset - Salvage value) / Useful life. The monthly depreciation expense is given as $600. The cost of the truck is $40,000, and the salvage value is $4,000. To find the useful life in years, we must first find the total amount to be depreciated, which is the cost minus the salvage value ($40,000 - $4,000 = $36,000), and then divide by the monthly depreciation over 12 months to get the number of years:
Total amount to be depreciated = $36,000 Monthly depreciation expense = $600 Annual depreciation = $600 \* 12 = $7,200 Useful life = Total depreciation / Annual depreciation Useful life = $36,000 / $7,200 Useful life = 5 yearsTherefore, the truck's useful life is 5 years.To find the useful life in years, we must first find the total amount to be depreciated, which is the cost minus the salvage value ($40,000 - $4,000 = $36,000), and then divide by the monthly depreciation over 12 months to get the number of years: