Question
In: Accounting
Cambridge Company purchased a truck on January 1, 2018. Cambridge paid $15,000 for the truck. The...
Cambridge Company purchased a truck on January 1, 2018. Cambridge paid $15,000 for the truck. The truck is expected to have a $2,000 residual value and a 6-year life. Cambridge has a December 31 fiscal year end. Using the straight-line method, how much is the 2019 depreciation expense? (Enter only whole dollar values.)
Solutions
Expert Solution
Answer)
Calculation of Depreciation expense for the year 2019
Depreciation expense = (Original cost – Salvage value)/ Number of years of useful life of the Asset
= ($ 15,000 - $ 2,000)/ 6 years
= $ 2,166.67 or $ 2,167 (rounded off)
Therefore depreciation expense for the year 2019 is $ 2,167.
Note: Under straight line depreciation method, same amount of depreciation is charged each year over the life of the asset. Therefore $ 2,167 (rounded off) will be the depreciation expense for the year 2019.
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