Question

A delivery truck costing $8,000 with a salvage value of $500 and an estimated useful life of 5 years was purchased on January 1, Year 1. Accumulated Depreciation balance, at the end of Year 2, straight line method would be

a. $1,500
b. $3,000
c. $3,200
d. $3,700

Answer 1

The accumulated depreciation of the delivery truck at the end of Year 2 using the straight-line method is $3,000. Therefore correct option is B

Step-by-step explanation:

The question concerns calculating the accumulated depreciation for a delivery truck using the straight-line depreciation method.

Using the given values: an initial cost of $8,000, salvage value of $500, and a useful life of 5 years, we first need to determine the annual depreciation expense.

This is done by subtracting the salvage value from the cost and then dividing by the estimated useful life:

($8,000 - $500) / 5 = $1,500 per year.

As we are looking for the accumulated depreciation at the end of Year 2, we multiply the annual depreciation expense by 2: $1,500 x 2 = $3,000.