A company purchased a delivery van on October 1 of the current year at a cost of $40,000. The van is expected to last six years and has a salvage value of $2,200. The company's annual accounting period ends on December 31.1. What is the depreciation expense for the current year, assuming the straight-line method is used?2. What is the book value of the van at the end of the first year?
What will be an ideal response?
1. [($40,000 ? $2,200)/6] * 3/12 = $1,575
2. Cost ? Accumulated Depreciation = Book Value; $40,000 ? $1,575 = $38,425
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