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Homework answers / question archive / A truck was purchased for $90,000 with an $18,000 salvage value at the end of its useful life

A truck was purchased for $90,000 with an $18,000 salvage value at the end of its useful life

Accounting

A truck was purchased for $90,000 with an $18,000 salvage value at the end of its useful life. Monthly depreciation expense of $1,500 was recorded using the straight-line method. The annual depreciation rate is

a. 20%.

b. 2%.

c.   8%.

d. 25%.

 

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Answer:

a .

Step-by-Step explanation

Annual depreciation rate = (Annual Depreciation expense / Actual cost) ?×?100

= ($18,000 / $90,000) ?×? 100

= 20%

Where,

Annual depreciation expense = $1,500 ?×? 12

= $18,000

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