Tasty subs acquired a delivery truck on october 1, 2018, for $19,500. the company estimates a residual value of $2,100 and a six-year service life.

The question is calculating the depreciation expense using straight-line method for 2018 and 2019?

Depreciation expenses for 2018: $725;

Depreciation expenses for 2019: $2,900.

Explanation:

We have yearly depreciation expenses is calculated as:

Yearly Depreciation expense = (Original cost - Salvage value) / Useful life = (19,500 - 2,100) /6 = $2,900.

For 2019, depreciation expense is recorded for the full-year at $2,900.

For 2018, depreciation expense is recorded for only three months ( as delivery truck was bought on Oct 1st 2018), which is calculated as: Yearly Depreciation expense / 12 * 3 = $725.

So, the answer is:

Depreciation expenses for 2018: $725;

Depreciation expenses for 2019: $2,900.

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