Question

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four year useful life and an $8,000 salvage value. If Marino uses the straight-line method, the amount of depreciation expense recognized on the Year 2 income statement is ________.
a- $4,000.
b- $6,000.
c- $12,000.
d- $24,000.

Answer 1

Answer:

$10,000

Explanation:

The computation of the depreciation expense is shown below:

= (Purchase value of a truck - salvage value) ÷ (expected useful life)

= ($48,000 - $8,000) ÷ (4 years)

= ($40,000) ÷ (4 years)  

= $10,000

The depreciation expense in this method is the same for the entire remaining useful life

Note: This is the answer and the same is not provided in the given options