Question

Your answer is incorrect. Blossom Chemicals Company acquires a delivery truck at a cost of $20,000 on January 1, 2022. The truck is expected to have a salvage value of $2,000 at the end of its 3-year useful life. Compute annual depreciation for the first and second years using the straight-line method. First Year Second Year $ Annual depreciation under straight-line method tA

Answer 1

Solution

	First year	Second year
Annual depreciation under straight line method	$       6,000.00	$             6,000.00

Working

Straight line Method
A	Cost	$ 20,000
B	Residual Value	$ 2,000
C=A - B	Depreciable base	$ 18,000
D	Life [in years left ]	3
E=C/D	Annual SLM depreciation	$               6,000.00

.

Depreciation schedule-Straight line method
Year	Book Value	Depreciation expense	Accumulated Depreciation	Ending Book Value
1	$          20,000.00	$               6,000.00	$                6,000.00	$              14,000.00
2	$          14,000.00	$               6,000.00	$             12,000.00	$                 8,000.00
3	$            8,000.00	$               6,000.00	$             18,000.00	$                 2,000.00