Straight-line depreciation irons delivery inc. purchased a new delivery truck for $42,000 on january 1, 2019. the truck is expected to have a $1,990 residual value at the end of its 5-year useful life. irons uses the straight-line method of depreciation. required: prepare the journal entry to record depreciation expense for 2019 and 2020.

Explanation:

The computation of the depreciation expense under straight-line method is shown below:

= (Original cost - residual value) ÷ (useful life)

= ($42,000 - $1,990) ÷ (5 years)

= ($40,010) ÷ (5 years)  

= $8,002

In this method, the depreciation is same for all the remaining useful life

The journal entries are shown below:

For 2019

Depreciation expense A/c Dr $8,002

     To Accumulated Depreciation A/c $8,002

(Being depreciation expense is recorded)

For 2020

Depreciation expense A/c Dr $8,002

     To Accumulated Depreciation A/c $8,002

(Being depreciation expense is recorded)

answer/// equals both average variable cost and average total cost at their respective minimums;