Depreciation Methods – MCQ

Practice Question

Intro to Financial Accounting
Long-Lived Assets
Depreciation Methods
MCQs

A company purchased a vehicle for $40,000 with an estimated useful life of 8 years and no residual value. Calculate the total depreciation expense at the end of year 4 using the straight-line method.

  1. $5,000
  2. $20,000
  3. $10,000
  4. $35,000
Answer +
Correct Answer: B
Explanation +

Using the straight-line method, the annual depreciation expense is:

\(\text{Depreciation} = \frac{\$40,000 - \$0}{8} = \$5,000\) per year

Over 4 years: \( \$5,000 \times 4 = \$20,000 \)

So, the total depreciation expense at the end of year 4 is $20,000.