Question

Assuming a truck purchased for $50,000 on 7/1/X4 has an estimated useful life of ten years and an estimated salvage value at the end of those ten years equal to $5,000, calculate the amount of accumulated depreciation on the truck at 12/31/X5 under straight-line depreciation. a. $9,000

b. $10,000
c. $4,500
d. $5,000

Answer 1

The accumulated depreciation of the truck at 12/31/X5 is calculated by subtracting the salvage value from the cost of the asset and dividing by the useful life, resulting in a yearly depreciation of $4,500. Since the truck has been in use for 1.5 years, the total accumulated depreciation is $4,500 multiplied by 1.5, equaling $6,750.

Step-by-step explanation:

To calculate the accumulated depreciation on the truck at 12/31/X5 under straight-line depreciation, we use the following formula:

• Depreciation Expense = (Cost of the Asset - Salvage Value) / Useful Life

The cost of the asset is $50,000, the salvage value is $5,000, and the useful life is 10 years. This gives us a yearly depreciation expense as follows:

Depreciation Expense = ($50,000 - $5,000) / 10 = $4,500 per year

Since the truck was purchased on 7/1/X4, we will have 1.5 years of depreciation by 12/31/X5:

Accumulated Depreciation = $4,500 per year * 1.5 years = $6,750

So the accumulated depreciation at 12/31/X5 is $6,750, which is not one of the options provided. It seems there might be a typo or a mistake in the provided options.