Question

Whispering Winds Company acquires a delivery truck at a cost of $43,000. The truck is expected to have a salvage value of $16,000 at the end of its 4-year useful life. Compute annual depreciation expense for the first and second years using the straight-line method.

a) $9,250 and $9,250
b) $11,750 and $11,750
c) $9,250 and $11,750
d) $11,750 and $9,250

Answer 1

The annual depreciation expense for the first and second years using the straight-line method is $9,250.

Step-by-step explanation:

The annual depreciation expense for the first and second years using the straight-line method can be calculated by subtracting the salvage value from the cost and dividing the result by the useful life of the truck.

For the first year:
Depreciation expense = (Cost - Salvage value)/Useful life = ($43,000 - $16,000)/4 = $9,250

For the second year:
Depreciation expense = (Cost - Salvage value)/Useful life = ($43,000 - $16,000)/4 = $9,250

Therefore, the correct answer is (a) $9,250 and $9,250.