Brief Exercise 10-04 Corales Company acquires a delivery truck at a cost of $38,000. The truck is expected to have a salvage value of $6,000 at the end of its 4-year useful life. Compute annual depreciation expense for the first and second years using the straight-line method.

The depreciation expense for the first and second year using the straight line method is $8,000 each.

 = (Cost of truck - Salvage value) ÷ Useful life

= ($38,000 - $6,000) ÷ 4

= $32,000 ÷ 4

= $8,000 per year

Therefore we can conclude that the depreciation expense for the first and second year using the straight line method is $8,000 each.

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The correct answer for 1st year is $8,000 and for 2nd year is $8,000.

Explanation:

According to the scenario, the given data are as follows:

cost of truck = $38,000

Salvage value = $6,000

Useful life = 4 years

So, we can calculate the depreciation expense by using following formula:

Depreciation expense = ( cost of truck - Salvage value) ÷ Useful life

By putting the following value in the formula, we get

Depreciation expense = ( $38,000 - $6,000) ÷ 4

= $32,000 ÷ 4

= $8,000 per year

So, Depreciation expense for 1st year = $8,000

And Depreciation expense for 2nd year = $8,000.

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