Question

Sally McPherson uses a van entirely for business. She trades in her van every 4 years. McPherson paid $35,000 for her van and expects to receive $11,000 for the van when she trades it in after 4 years. Using the straight-line method, what is the annual depreciation?

Answer 1

Answer: $6000

Explanation:

Cost of van = $35000

Estimated Savage value = $11000

Useful life of asset = 4 years

The annual depreciation using the straight-line method will be:

= (Cost of van - Estimated Savage value) / Useful life of asset =

= ($35000 - $11000)/4

= $24000/4

= $6000

Therefore, annual depreciation is $6000