Delta Ltd purchased a motor vehicle for $45 000 on 1 January 2016.The vehicle was expected to have a life of three years and an estimated disposal value of $15 000.The straight-line method of depreciation is employed and the financial year ends on 30 June.
-What was the depreciation expense for year ended 30 June 2016?

Question

Quizplus · Accepted Answer

The total depreciation expense for the vehicle is calculated as follows:
Depreciation per year = (Cost - Disposal value) / Useful life
= ($45,000 - $15,000) / 3
= $10,000 per year

Since the financial year ends on 30 June, the depreciation expense for the year ended 30 June 2016 would be half of the annual depreciation.
Depreciation expense for year ended 30 June 2016 = $10,000 / 2
= $5,000

Delta Ltd Purchased a Motor Vehicle for $45 000 on 1