On January 1, Year 1, Martin Mowing Company paid $64,000 to purchase a truck. The truck was expected to have a six-year useful life and a $4,000 salvage value. If Margin uses the straight-line method, the amount of depreciation expense recognized on the Year 2 income statement is
A)$10,000
B)$20,000
C)$21,333
D)$30,000

Question

Quizplus · Accepted Answer

The straight-line depreciation method calculates annual depreciation by subtracting the salvage value from the cost and dividing by the useful life. ($64,000 - $4,000) / 6 = $10,000 per year.

On January 1, Year 1, Martin Mowing Company Paid $64,000