Question

Johnson Company purchases a $36,000 truck that is estimated to last nine years, with no salvage value. If Johnson uses the straight line method of depreciation, what will the accumulated depreciation amount to after two years of use?
a. $0
b. $8,000
c. $9,000
d. $36,000

Answer 1

Solution:-

Straight line method = Cost of Truck / No of years

                                 = $36000 / 9 years

                                 = $4000

Year	Opening Balance	Depreciation	Accumulated Depreciation	Closing Balance
1	$36,000	$4000	$4000	$32,000
2	$32,000	$4000	$8000	$28,000
3	$28,000	$4000	$12,000	$24,000
4	$24,000	$4000	$16,000	$20,000
5	$20,000	$4000	$20,000	$16,000
6	$16,000	$4000	$24,000	$12,000
7	$12,000	$4000	$28,000	$8,000
8	$8,000	$4000	$32,000	$4,000
9	$4,000	$4000	$36,000	0

The accumulated depreciation amount to after two years of use $8,000