Question

Straight-Line Depreciation Irons Delivery Inc. purchased a new delivery truck for $42,000 on January 1, 2019. The truck is expected to have a $2,020 residual value at the end of its 5-year useful life. Irons uses the straight-line method of depreciation. Required:

Answer 1

Annual depreciation= $7,996

Step-by-step explanation:

Giving the following information:

Purchase price= $42,000

Useful life= 5 years

Salvage value= $2,020

To calculate the annual depreciation under the straight-line method, we need to use the following formula:

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

Annual depreciation= (42,000 - 2,020) / 5

Annual depreciation= $7,996