Homework Answers
Answer : Option A : $ 5,600
Explanation:
In straight line depreciation we calculate depreciation by taking the purchase price of the asset and deducting the estimated salvage or residual value from it and then dividing it by the estimated useful life of the asset. The depreciation amount is equal in all years in straight line method.
So depreciation in first year will be:
Straight line depreciation = (Purchase price of truck - Residual Value) / Estimated useful life of the truck
= ($ 53,000 - $ 25,000 ) / 5 years
= $ 28,000 / 5
= $ 5,600
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