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22 February, 09:44

Straight-Line Depreciation Irons Delivery Inc. purchased a new delivery truck for $42,000 on January 1, 2019. The truck is expected to have a $1,990 residual value at the end of its 5-year useful life. Irons uses the straight-line method of depreciation. Required: Prepare the journal entry to record depreciation expense for 2019 and 2020.

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  1. 22 February, 11:25
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    The computation of the depreciation expense under straight-line method is shown below:

    = (Original cost - residual value) : (useful life)

    = ($42,000 - $1,990) : (5 years)

    = ($40,010) : (5 years)

    = $8,002

    In this method, the depreciation is same for all the remaining useful life

    The journal entries are shown below:

    For 2019

    Depreciation expense A/c Dr $8,002

    To Accumulated Depreciation A/c $8,002

    (Being depreciation expense is recorded)

    For 2020

    Depreciation expense A/c Dr $8,002

    To Accumulated Depreciation A/c $8,002

    (Being depreciation expense is recorded)
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