A company purchased a new delivery van at a cost of $45,000 on July 1.The truck is estimated to have a useful life of 6 years and a salvage value of $3,000.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)$3,250.
B)$3,500.
C)$4,000.
D)$6,500.
E)$7,000.

Question

Quizplus · Accepted Answer

The annual depreciation expense is calculated as (Cost - Salvage Value) / Useful Life = ($45,000 - $3,000) / 6 = $7,000. Since the van was purchased on July 1, only half a year of depreciation is recorded for the first year: $7,000 / 2 = $3,500.

A Company Purchased a New Delivery Van at a Cost