van for $28,000 with a salvage value of $3,000 on September 1, Year 1. It has...

van for $28,000 with a salvage value of $3,000 on September 1, Year 1. It has an estimated useful life of 5 years. Using the straight-line method, how much depreciation expense should the company recognize on December 31, Year 1?
Select one:
a. $1,400.
b. $5,000.
c. $1,250.
d. $1,667.
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Expert Solution

Answer : b. $5,000

depreciation expense that the company should recognize on December 31, Year 1 = $5,000

See calculations below:

Annual depreciation using straight line method = (purchase price - salvage value) / useful life

Purchase price of Van = $28,000

Salvage value = $3,000

Useful life = 5 years

Annual depreciation = (28,000 - 3,000) / 5

= $5,000

ekkarill92 answered 2 years ago

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