Cramer Company purchased equipment on May 1, 2017 for $600,000. The residual value is $60,000 and the estimated useful life is 10 years. What is the Depreciation Expense for the year ending December 31, 2017, if the company uses the straight-line method? (Round your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The annual depreciation expense using the straight-line method is calculated as (Cost - Residual Value) / Useful Life. For 2017, the equipment was used for 8 months, so the depreciation expense is ($600,000 - $60,000) / 10 * (8/12) = $36,000.

Cramer Company Purchased Equipment on May 1, 2017 for $600,000