Question

Tasty Subs acquired a delivery truck on October 1, 2021, for $22,500. The company estimates a residual value of $2,700 and a six-year service life. Required: Calculate depreciation expense using the straight-line method for 2021 and 2022, assuming a December 31 year-end.

Answer 1

Answer: Depreciation expense for 2021 = $825

Depreciation expense for 2022 =$3, 300

Explanation:

Using  Straight line depreciation

We have that our Annual depreciation= Purchase price - salvage value / useful life.

$22,500 - $2,700 / 6

=19,800/6

$3, 300

Depreciation expense for 2021  ( from October to December )

$3,300 x 3/ 12= $9,900/12

=$825

Depreciation expense for 2022 (  From January  to December)

Annual Depreciation = $3,300