The Oberon Company purchased a delivery truck for $95,000 on January 2. The truck was estimated to have a $3,000 salvage value and a 4 year life. The truck was depreciated using the straight-line method. At the beginning of the third year, it was determined the truck's total useful life would be 6 years rather than 4, and the salvage at the end of the 6th year would be $1,500. Determine the depreciation expense for the truck for the 6 years of its life. YearDepreciation expense1?2?3?4?5?6?
What will be an ideal response?
| Year | Depreciation expense |
| 1 | $23,000 |
| 2 | 23,000 |
| 3 | 11,875 |
| 4 | 11,875 |
| 5 | 11,875 |
| 6 | 11,875 |
Year 1-Year 2 depreciation = ($95,000 - $3,000)/4 years = $23,000
Book value at 12/31/Year 2 = $95,000 - ($23,000 x 2) = $49,000
Year 3-Year 6 depreciation = ($49,000 - $1,500)/4 years = $11,875
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