Question

In: Accounting

How much depreciation expense will be recorded for the van during the first year ended December 31

A company purchased a new delivery van at a cost of $62,000 on July 1. The delivery van is estimated to have a useful life of 5 years and a salvage value of $5,000. 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

(a) $6,200

(b) $5,700

(c) $6,000

(d) $11,400

(e) $6,700

Solutions

Expert Solution

Calculation of Depreciation Expense

Given information in the problem

Cost of new delivery van = $62,000

Salvage value of delivery van = $5,000

Useful life of delivery van =  5 Years

Formula for calculating Depreciation Expense

Depreciation Expense = Cost - Salvage Value / Useful Life

= $62,000 - $5,000 / 5 * 6 / 12

= $5,700

option (b) $5,700 is the correct choice


option (b) $5,700 is the correct choice

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