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A company purchased a new delivery van at a cost of $61,000 on July 1

A company purchased a new delivery van at a cost of $61,000 on July 1. The delivery van is estimated to have a useful life of 5 years and a salvage value of $4,900. 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 ?


Multiple Choice

  • $5,610

  • $5,880


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Answer #1

Answer: $5,610

Explanation

Straight Line Depreciation for December 31
(Cost - Salvage Value) / Useful Life = Annual Depreciation
(61,000 - 4,900) / 5 = $             11,220.00
Year Annual Depreciation x Fraction Year = Depreciation Expense
1st year                   11,220.00 x 6/12 = $               5,610.00
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