# Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of$6,000 and is expected to be driven for ten years. Montello uses the straight-line depreciation method. Calculate the annual depreciation expense.

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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

#### Solutions

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Section
FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 11, Problem 3EB
Textbook Problem
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## Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of$6,000 and is expected to be driven for ten years. Montello uses the straight-line depreciation method. Calculate the annual depreciation expense.

To determine

To compute:

The annual depreciation expense with the help of straight-line depreciation method.

Introduction:

An expense due to regular use and consumption of capital assets is known as depreciation. Depreciation is generally calculated by using Straight line or Reducing balance methods.

### Explanation of Solution

Calculation of annual depreciation expense with the help of straight-line depreciation method:

Formula to calculate the annual depreciation expense:

Annual Depreciation Expense=CostSalvage ValueUseful Life

Susbtitute, $25,000 for cost,$6,000 for salvage value and 10 years for useful life in the above formula

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