Question

A company purchased a delivery van for $20,700 with a salvage value of $2,100 on September 1, Year 1. It has an estimated useful life of 6 years. Using the straight-line method, how much depreciation expense should the company recognize on December 31, Year 1

Answer 1

$775

Step-by-step explanation:

Calculation for Depreciation expenses using the Straightline method

Using this formula

Annual Depreciation =(Cost -salvage ) / Life in years

Let plug in the formula

Annual Depreciaion = (20,700-2,100)/6

=18,600/6

= 3,100

Depreicaion From Sept to December = 3,100*3/12

= $ 775

Therefore Using the straight-line method the depreciation expense that the company

should recognize on December 31, Year 1 will be $775