October 1, 2014, Pizza Pete buys a truck to deliver pizza for $40,000. The truck has a salvage value of $1,500 and useful life of 7 years.
Part A) Calculate the Depreciation expense and book value for 2014 and 2015 using straight line method.
Part B) (Additions) If Pizza Pete buys a tow hitch that cost $9,000 on January 1, 2016 to use tow illegally parked cars. The tow hitch does not extend the useful life of the truck. Using the information from Part A and using straight line depreciation method, calculate the 2016 depreciation expense and book value. (Omit some information)