Business FinancesQuestion 301 of 1605
A contractor buys a work truck for $45,000, expects to use it for 5 years, and estimates a salvage value of $5,000. Using straight-line depreciation, what is the annual depreciation expense?
a.$8,000
b.$9,000
c.$10,000
d.$40,000
Explanation
Straight-line depreciation = (Cost − Salvage Value) ÷ Useful Life = ($45,000 − $5,000) ÷ 5 = $40,000 ÷ 5 = $8,000 per year.
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