ABC purchases a new delivery truck on January 1, 2022. The cost of the truck is $40,000. The truck is expected to last for five (5) years and at that time have a salvage (residual) value of $5,000.

After two (2) years, ABC believes it will now have the delivery truck for a total of 8 years and after that time, the truck will have a $2,000 salvage (residual) value.

After 6 years, ABC sells the truck for $6,000.

For Question 1-9, assume that ABC uses the straight line method of depreciation.

5. What is the year 3 depreciation expense?

6. What is the net book value of the delivery truck after 3 years?

7. What is the net book value of the delivery truck after 6 years?

8. What is the balance in accumulated depreciation of the delivery truck after 6 years (immediately prior to the sale)?

9. What is the gain/loss on the sale of the delivery truck?