Cork Oak Corporation purchased a heavy-duty truck not considered a passenger automobile for purposes of the listed property and luxury automobile limitations)on June 1,2013 for use in its business.The truck,with a cost basis of $18,000,has a 5-year estimated life.It also is 5-year recovery property.How much depreciation should be taken on the truck for the 2013 calendar tax year using the conventional for financial accounting purposes)straight-line depreciation method?

Question

Quizplus · Accepted Answer

The straight-line depreciation method divides the cost basis by the estimated life of the asset, and does not take into consideration salvage value. Therefore, the annual depreciation for Cork Oak Corporation's truck would be $18,000/5 years = $3,600 per year. Since the truck was purchased on June 1, 2013, the company can only take half-year depreciation for the 2013 calendar tax year, which would be $3,600/2 = $1,800. Therefore, the correct answer is (B) $1,800.

Cork Oak Corporation Purchased a Heavy-Duty Truck Not Considered a Passenger