Question

a company purchased a vehicle for $ 6000. it is used for 5 years and its residual value is expected to be $ 100. what is the annual amount of depreciation using straight line method of depreciation?

Answer 1

Depreciation =

(Cost of the Asset - Residual Value) / life of the asset

($6000 - $100) / 5 years.

$5900 / 5

$1,180

Over the period of 5 years , the vehicle will be depreciated by charging depreciation amounting $1,180 to the Profit and Loss A/C .

Answer 2

hey mate here is your answer

so the result to calculate depreciation by straight line method is

= (original value - scrap value) / time of usage

= 6000 - 100/5

= 5900/5

= 1,180

so the depreciation charged on the vehicle is $1,180