Concept explainers
A delivery van was bought for $18,000. The estimated life of the van is four years. The trade-in value at the end of four years is estimated to be $2,000.
Required
Prepare a
Check Figure
Year 1 depreciation, $4,000
Prepare depreciation schedule for the four year estimated useful life of the delivery van under straight-line depreciation method.
Explanation of Solution
Straight-line method: The depreciation method which assumes that the consumption of economic benefits of long-term asset could be distributed equally throughout the useful life of the asset, is referred to as straight-line method.
Formula for straight-line depreciation method:
Prepare depreciation schedule for the four year estimated useful life of the delivery van under straight-line depreciation method, if cost of the asset is $18,000 and trade-in value is $2,000.
Table (1)
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