Asked by Pallavi Ingale on Jun 15, 2024
Verified
A company purchased a delivery van on October 1 of the current year at a cost of $40,000.The van is expected to last six years and has a salvage value of $2,200.The company's annual accounting period ends on December 31.
1.What is the depreciation expense for the current year,assuming the straight-line method is used?
2.What is the book value of the van at the end of the first year?
Straight-Line Method
A depreciation technique that allocates an equal amount of depreciation to each year of the asset's useful life.
Salvage Value
The predicted value of an asset on the market at the close of its effective life.
Depreciation Expense
The methodical distribution of a physical asset's expense over its lifespan, indicative of the asset's usage or deterioration.
- Learn to evaluate the depreciation expense by applying multiple methods, namely straight-line, double-declining balance, and units-of-production.
- Familiarize oneself with the procedure of creating adjusting journal entries to register depreciation and asset disposals.
Verified Answer
2.Cost - Accumulated Depreciation = Book Value; $40,000 - $1,575 = $38,425
Learning Objectives
- Learn to evaluate the depreciation expense by applying multiple methods, namely straight-line, double-declining balance, and units-of-production.
- Familiarize oneself with the procedure of creating adjusting journal entries to register depreciation and asset disposals.
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