A company purchased a delivery van for $28,000 with a salvage value of $3,000 on September 1, Year 1. It has an estimated useful

Response:

Depreciation as of December 31, Year 1 will amount to $1,250

Detailed explanation:

Cost of Purchase = $28,000

Salvage Value = $3,000

Total Depreciation:

The total depreciation over 5 years (60 months) is calculated as Purchasing Cost minus Salvage Value

Total Depreciation over 5 years (60 months) = 28,000 - 3,000

Total Depreciation over 5 years (60 months) equals $25,000

Calculating Monthly Depreciation:

Monthly depreciation is derived from the overall depreciation divided by the total number of months as follows:

Total Depreciation for a single month = 25,000/60

Depreciation per month = 416.67$ (Monthly Depreciation)

Depreciation until December 31, Year 1

As this spans from September 1 to December 31 of Year 1, three months have passed, yielding total depreciation = 3 * Monthly Depreciation

Thus, Depreciation as of December 31, Year 1 = 3 * 416.67

Total Depreciation by December 31, Year 1 = $1,250