Account for depreciation expense.
E. Hutson Pastries Inc. purchased a new delivery van on July 1, 2007, for $35,000. The truck is estimated to last for 5 years and will then be sold, at which time it should be worth nothing. The company uses straight-line depreciation and has a fiscal year-end of June 30.
a. How much depreciation expense will be shown on the income statement for the year ended June 30, 2010?
b. What is the book value (also called carrying value) of the truck on the balance sheet for each of the 5 years beginning with June 30, 2008?