Question

Grouper company acquires a delivery truck at a cost of $50,000. The truck is expected to have a salvage value of $12,000 at the end of ita 5-year useful life.

compute annual depreciation expense for the first and seconds years using the straight-line method.

Answer 1

Cost of Truck	$50,000
Less: Salvage value	($12,000)
Depreciable Value of Truck	$38,000
Useful life of the truck	5 years
Depreciation Expense for each year ($38,000 / 5 years)	$7,600

Depreciation expense for first and second years is $7,600 each because depreciation expense under straight-line method is same in all years.

Therefore, depreciation expense for first year is $7,600 and second year is $7,600.