Rose Bush Nursery purchased a delivery truck for $27,000.The truck is expected to have a useful life of 4 years and a residual value of $1,080.If the truck was purchased on June 1,2016,what is the amount of depreciation expense for the truck for the year ended December 31,2016?

Question

Quizplus · Accepted Answer

The truck's annual depreciation is calculated using the straight-line method: (Cost - Residual Value) / Useful Life = ($27,000 - $1,080) / 4 = $6,480 per year. For 2016, depreciation is for 7 months (June to December), so: ($6,480 / 12) * 7 = $3,780.

Rose Bush Nursery Purchased a Delivery Truck for $27,000