Question

Sheridan Chemicals Company acquires a delivery truck at a cost of $30,200 on January 1, 2022. The truck is expected to have a salvage value of $2,800 at the end of its 5-year useful life. Compute annual depreciation for the first and second years using the straight-line method.

Answer 1

Year 1= $5,480

Year 2= $5,480

Step-by-step explanation:

Giving the following information:

Sheridan Chemicals Company acquires a delivery truck for $30,200 on January 1, 2022. The truck is expected to have a salvage value of $2,800 at the end of its 5-year useful life.

Under the straight-line method, the depreciation expense is the same in all of the useful life of the truck.

We need to use the following formula:

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (30,200 - 2,800)/5= $5,480

Year 1= $5,480

Year 2= $5,480