Early in the fiscal year, The Beanery purchases a delivery vehicle for $ 40,000. At the end

Question:

Early in the fiscal year, The Beanery purchases a delivery vehicle for $ 40,000. At the end of the year, the machine has a fair value of $ 33,000. The company controller records depreciation expense of $ 7,000 for the year, the decline in the vehicle’s value. Explain why the controller’s approach to recording depreciation expense is not correct.