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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

aA 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 depreciation schedule for the four-year period using the straight-line method.

Check Figure

Year 1 depreciation, $4,000

To determine

Prepare depreciation schedule for the four year estimated useful life of the delivery van under straight-line depreciation method.

Explanation

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:

Depreciation expense=Cost of asset–Trade-in valueYeasr in life

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.

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