Question

A company purchased a new delivery van at a cost of $58,000 on July 1. The delivery van is estimated to have a useful life of 4 years and a salvage value of $4,600. 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?a. $13,350.

b. $6,260.
c. $6,675.
d. $7,250.
e. $5,750.

Answer 1

a. $13,350

Step-by-step explanation:

Using straight-line method of depreciation the depreciable value of an assets is expensed over the useful life of the asset equally each year.

Use following formula to calculate the depreciable value

Depreciable value = Cost of asset - Salvage value

Placing values in the formula

Depreciable value = $58,000 - $4,600

Depreciable value = $53,400

Now use following formula to calculate the depreciation value of each year

Depreciation expense = Depreciable value of the asset / Useful life of the asset

Placing values in the formula

Depreciation expense = $53,400 / 4 years

Depreciation expense = $13,350