A company purchased factory equipment on June 1, 2017 for $48,000. It is estimated that the equipment will have a $6,000 residual value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2017 is

Question

Quizplus · Accepted Answer

The annual depreciation expense is calculated as ($48,000 - $6,000) / 10 = $4,200. Since the equipment was purchased on June 1, 2017, the depreciation for 2017 is for 7 months: $4,200 * (7/12) = $2,450.

A Company Purchased Factory Equipment on June 1, 2017 for $48,000