A new vehicle was purchased on January 1 for $46,000. It has a salvage value of $7,000 and a useful life of 6 years. To the nearest dollar, how much will the depreciation expense for the vehicle be for the first year using the straight-line method?
A)$6,500
B)$639
C)$7,667
D)$542

Question

Quizplus · Accepted Answer

The straight-line depreciation method calculates the depreciation expense by evenly spreading the cost of the asset over its useful life. The formula is: (Cost - Salvage Value) / Useful Life. For this vehicle, the calculation is: ($46,000 - $7,000) / 6 = $39,000 / 6 = $6,500 per year.

A New Vehicle Was Purchased on January 1 for $46,000