On January 1, Year 1, Marino Moving Company paid $64,000 cash to purchase a truck. The truck was expected to have a four-year useful life and a $4,000 salvage value. If Marino uses the straight-line method, the amount of depreciation expense recognized on the Year 2 income statement is

Question

Quizplus · Accepted Answer

The annual straight-line depreciation is calculated as [(purchase price – salvage value) / useful life]. 
In this case, the annual depreciation expense would be [(64,000 - 4,000) / 4] = $15,000. 
Therefore, the amount of depreciation expense recognized on the Year 2 income statement would be $15,000.

On January 1, Year 1, Marino Moving Company Paid $64,000