Best Construction purchased a delivery truck on June 1, 2021. The following information is available: Cost = $90,000 Estimated service life = 5 years Estimated residual value = $15,000 Calculate depreciation expense for the year ended December 31, 2022, using straight-line depreciation.

Question

Brenna Cunningham

Business

4 October, 12:30

Best Construction purchased a delivery truck on June 1, 2021. The following information is available: Cost = $90,000 Estimated service life = 5 years Estimated residual value = $15,000 Calculate depreciation expense for the year ended December 31, 2022, using straight-line depreciation.

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Ellison · Answer 1

Depreciation expense for the year ended December 31, 2022: $15,000

Explanation:

Best Construction uses straight-line depreciation method. Depreciation Expense each year is calculated by following formula:

Annual Depreciation Expense = (Cost of asset - Residual Value) / Useful Life

The delivery truck was purchased on June 1, 2021 and had cost of $90,000, Estimated service life of 5 years and Estimated residual value of $15,000.

Annual Depreciation Expense = ($90,000 - $15,000) / 5 = $15,000

Depreciation expense for the year ended December 31, 2022 = $15,000