The depreciation expenses for the second year of the car is $4,325
Depreciation cost:
In economics, depreciation cost refers the loss in value of an item over time. Purchases are generally most valuable and worth the most amount of money when they are new.
Given,
Here we need to find the depreciation expense for the second year by using the straight-line method when the cost of car $ 18,000 residual value $ 700 life 4 years.
Here we know the following values:
Original cost = $18,000
Residual value = $ 700
Life time = 4 years
Then the depreciation cost is calculated as,
=> (18000 - 700)/4
=> 4325
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