Question

A company purchased a new delivery van at a cost of $57,000 on July 1. The delivery van is estimated to have a useful life of 6 years and a salvage value of $4,500. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the van during the first year ended December 31

Answer 1

The answer is $4,375.02

Step-by-step explanation:

Straight-line method of depreciation=

(Cost of acquiring the asset - salvage/residual value) / number of useful life.

Cost of acquiring the asset = $57,000

salvage/residual value = $4,500

Useful life = 6 years

($57,000 - $4,500) / 6 years

= $8,750

This is the yearly depreciation.

Monthly depreciation = $8,750/12 months

=$729.17

July 1 through December 31 is 6 months.

Therefore, depreciation expense that will be recorded for the van during the first year ended December 31 is

$729.17 x 6 months

= $4,375.02