Upper Canada Corp. bought $72,000 of equipment with an estimated service life of 4 years. The equipment will be worthless at the end of its life. The annual amount of depreciation on this equipment is:

Question

Quizplus · Accepted Answer

To find the annual amount of depreciation on the equipment, we need to divide its cost by its estimated service life:

Annual Depreciation Expense = Cost of Equipment / Estimated Service Life

Annual Depreciation Expense = $72,000 / 4 years

Annual Depreciation Expense = $18,000

Therefore, the correct answer is D) $18,000.