Question

Sheboygan Co. purchased a new vehicle at a cost of $42,000 on July 1. The vehicle is estimated to have a useful life of 6 years and a salvage value of $3,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the vehicle during the first year ended December 31?

Answer 1

The depreciation at the end of first year = $3250

Step-by-step explanation:

The cost of a new vehicle on July 1st = $42000

The estimated useful life of vehicle = 6 years

The salvage value of vehicle = $3000

It is given that the company uses the straight-line method for depreciation so we have to calculate the depreciation by subtracting the salvage value from its cost and dividing by years.

Depreciation = ($42000 – $3000) / 6 = $6500

So annual depreciation is $6500.

Therefore depreciation at the end of the first yThe depreciation at the end of first year = $3250ear that is for 6 months = $3250