A company purchased a new delivery van at a cost of $46,000 on July 1. The delivery van is estimated to have a useful life of 4 years and a salvage value of $3,400. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the van during the first year ended December 31?

The amount of depreciation expense that will be recorded for the van during the first year ended December 31 is $5,325.

Explanation:

Since the company uses the straight-line method of depreciation, the annual depreciation expenses can first be calculated using the following formula:

Annual depreciation expense = (Cost of the asset - Salvage value) / Useful life (1)

Where;

Cost of the asset = $46,000

Salvage value = $3,400

Useful life = 4

Substituting the values into equation  (1), we have:

Annual depreciation expense = ($46,000 - $3,400) / 4

Annual depreciation expense = $10,650

Since July 1 to December 31 is just half of the year, the amount of depreciation expense that will be recorded for the van during the first year ended December 31 is the halve of the annual depreciation expense that can be calculated as follows:

Depreciation expense to be recorded = Annual depreciation expense / 2 = $10,650 / 2 = $5,325

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