Question

Tasty Subs acquired a food-service truck on October 1, 2024, for $23,100. The company estimates a residual value of $1,500 and a six-year service life. Required:Calculate depreciation expense using the straight-line method for 2024 and 2025, assuming a December 31 year-end.

Answer 1

The company estimates a residual value of $1,500 and a six-year service life.

It is given that,

Cost of truck delivery = $ 23100

Salvage value = $ 1500

Useful life = 6 years

Depreciation expenses by using the straight-line method are calculated as,

`Depreciation\text{ expenses p.a = }\frac{cost\text{ - salvage value }}{useful\text{ life}}`

Substituting the value in the formula,

`\begin{gathered} Depreciation\text{ expenses p.a = }\frac{23100\text{ - 1500}}{6} \\ Depreciation\text{ expenses p.a = }(21600)/(6) \\ Depreciation\text{ expenses p.a = 3600} \end{gathered}`

Thu