Question

On September 1, Emil Rovey purchased a vehicle for $38,000 with a residual value of $4,000. The estimated useful life is 8 years and the company uses the straight-line method. What is the depreciation expense for the year ended December 31

Answer 1

Depreciation expense= $1,416.67

Step-by-step explanation:

Giving the following information:

Purchasing price= $38,000

Residual value= $4,000

Useful life is 8 years.

First, we need to calculate the annual depreciation. We will use the following formula:

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

Annual depreciation= (38,000 - 4,000) / 8= $4,250

Now, the depreciation for 4 months.

Depreciation expense= (4,250/12)*4= $1,416.67