Jiang purchased a moving truck for the business. He paid $40,000 for the truck. Its salvage value is $8,500. Select the correct answer from the drop-down menu.

The depreciation expense of the moving truck for a useful life of 10 years is (blank space). If the truck’s useful life where 15 years, the depreciation expense would come to(blank space).

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jafruevu jafruevu · Answer 1 · 2019-11-24T12:01:35+01:00

Answer:

A. $3,150

B. $2,100

Step-by-step explanation:

A. Given,

Trucks cost price = $40,000

Salvage Value = $8,500

Useful life = 10 years

Since there is no requirement, I am using straight-line depreciation method to calculate the depreciation expense.

We Know,

Depreciation Expenses = (Cost price - Salvage Value) / Useful Life

Therefore,

Depreciation expense = ($40,000 - $8,500)/10

Depreciation Expense = $31,500/10

Depreciation Expense = $3,150

Therefore, under the straight-line method, the depreciation expense will be = $3,150.

B. Given, (When the useful year is 15)

Trucks cost price = $40,000

Salvage Value = $8,500

Useful life = 15 years

Since there is no requirement, I am using straight-line depreciation method to calculate the depreciation expense.

We Know,

Depreciation Expenses = (Cost price - Salvage Value) / Useful Life

Therefore,

Depreciation expense = ($40,000 - $8,500)/15

Depreciation Expense = $31,500/15

Depreciation Expense = $2,100

Therefore, under the straight-line method, the depreciation expense will be = $2,100