A company purchased a delivery van for $28,000 with a salvage value of $3,000 on September 1, Year 1. It has an estimated useful life of 5 years. Using the straight-line method, how much depreciation expense should the company recognize on December 31, Year 1?
A) $5,000.
B) $1,667.
C) $1,400.
D) $1,250.
E) $2,067.
B) $1,667.
Explanation: Depreciation Expense = (Cost - Salvage Value)/Est Useful Life * Length of
Ownership
Depreciation Expense = ($28,000 - $3,000)/5 * 4/12; Depreciation Expense = $1,667
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