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On January 1, 2018, Algo Company purchased a truck for $50,000. Salvage value is expected to...

On January 1, 2018, Algo Company purchased a truck for $50,000. Salvage value is expected to be $5,000. The truck's useful life is expected to be 5 year. The company uses the straight-line depreciation expense method to record depreciation. What is the truck's December 31, 2019 net book value after the recording of the 2019 depreciation expense?

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Answer #1

Step 1: Depreciation Expenses

Striaght line method depreciation expenses = (Asset Value - Salvage Value) / Useful life

Asset Value = $50,000

Salvage value = $5,000

Useful life = 5 years

Depreciation expenses = ($50,000 - $5,000) / 5 years = $9,000

Step 2: Book Value

Depreciation expense for year 2018 = $9,000

Net Book value as on December 31, 2018 = $50,000 - $9,000 = $41,000

Depreciation expense for year 2019 = $9,000

Net Book value as on December 31, 2019 = $41,000 - $9,000 = $32,000

All the best...

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