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13 December, 19:09

Jiang purchased a moving truck for the business. He paid $40,000 for the truck. Its salvage value is $8,500. Select the correct answer from the drop-down menu.

The depreciation expense of the moving truck for a useful life of 10 years is (blank space). If the truck's useful life where 15 years, the depreciation expense would come to (blank space).

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  1. 13 December, 19:11
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    A. $3,150

    B. $2,100

    Step-by-step explanation:

    A. Given,

    Trucks cost price = $40,000

    Salvage Value = $8,500

    Useful life = 10 years

    Since there is no requirement, I am using straight-line depreciation method to calculate the depreciation expense.

    We Know,

    Depreciation Expenses = (Cost price - Salvage Value) / Useful Life

    Therefore,

    Depreciation expense = ($40,000 - $8,500) / 10

    Depreciation Expense = $31,500/10

    Depreciation Expense = $3,150

    Therefore, under the straight-line method, the depreciation expense will be = $3,150.

    B. Given, (When the useful year is 15)

    Trucks cost price = $40,000

    Salvage Value = $8,500

    Useful life = 15 years

    Since there is no requirement, I am using straight-line depreciation method to calculate the depreciation expense.

    We Know,

    Depreciation Expenses = (Cost price - Salvage Value) / Useful Life

    Therefore,

    Depreciation expense = ($40,000 - $8,500) / 15

    Depreciation Expense = $31,500/15

    Depreciation Expense = $2,100

    Therefore, under the straight-line method, the depreciation expense will be = $2,100
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