Use the information below to answer the following questions.
Delta Ltd purchased a motor vehicle for $45,000 on 1 January 2011. The vehicle was expected to have a life of 3 years and an estimated disposal value of $15,000. The straight-line method of depreciation is employed and the financial year ends on 30 June.
-What was the depreciation expense for year ended 30 June 2011?
A) $15 000
B) $10 000
C) $7500
D) $5000.

Question

Quizplus · Accepted Answer

Using the straight-line method, the annual depreciation expense can be calculated as follows:
Depreciation Expense per Year = (Purchase Price - Estimated Disposal Value) / Useful Life
= ($45,000 - $15,000) / 3 years
= $10,000 per year
Since the vehicle was purchased on 1 January 2011, the depreciation expense for the year ended 30 June 2011 would be calculated as follows:
Depreciation Expense for 6 months = Depreciation Expense per Year x (6/12)
= $10,000 x 0.5
= $5,000
Therefore, the depreciation expense for the year ended 30 June 2011 was $5,000, which is option D.

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