Hi, I need help with Income statement.
| Vehicles | ||||
| Original Cost | $40,000.00 | |||
| Salvage Value | 2500 | |||
| Useful Life | 5 | |||
| Depreciation | $7,500.00 | |||
| Book Value | Depreciation | Accumulated | Book Value | |
| Period | Start | Expenses | Depreciation | End |
| 1 | $40,000.00 | $7,500.00 | $7,500.00 | $32,500.00 |
| 2 | $32,500.00 | $7,500.00 | $15,000.00 | $25,000.00 |
| 3 | $25,000.00 | $7,500.00 | $22,500.00 | $17,500.00 |
| 4 | $17,500.00 | $7,500.00 | $30,000.00 | $10,000.00 |
| 5 | $10,000.00 | $7,500.00 | $37,500.00 | $2,500.00 |
What should be in my income statement as Vehicle expenses for 2014, 2015 and 2016?
Answer:
Calculation of Depriciation is Correct
=Cost -Salvage Value /Life of the assets
=40000-2500 / 5 year
=37500 / 5 year
=7500 each year
Depreciation is the amount that are deducted over time to decline in the business vehicle’s value due to wear and tear
We assume that vehicle was purchased in the year 2014 so Vehicle expenses for 2014, 2015 and 2016 as follow
| Year | Expanses |
| 2014 | 7500 |
| 2015 | 7500 |
| 2016 | 7500 |
