Question

Calculate depreciation for year 2 based on the following information: Historical cost $40,000 Useful life 5 years Salvage value $3,000 Year 1 depreciation $7,400

Answer 1

Depreciation for year 2 is also $7,400.

Step-by-step explanation:

Assuming a straight line method of depreciation in which the depreciation is the same for each year, the annual depreciation can be calculated as follows:

Annual depreciation = (Historical cost - Salvage value) / Useful years = ($40,000 - $3,000) / 5 = $7.400

Since annual depreciation is $7,400, that implies that depreciation for year 2 is also $7,400.