On January 1,Year 1,Dalen Company purchased office equipment that cost $3,500.The equipment had an estimated five-year useful life and an estimated salvage value of $750.The company uses the straight-line method.What is the depreciation expense shown on the income statement and the related cash flow from operating activities shown on the statement of cash flows,respectively,for Year 1?

Question

Quizplus · Accepted Answer

Annual depreciation expense = (Cost of $3,500 - Salvage value of $750)÷ 5 years = $550
The $3,500 cash outflow to purchase the office equipment is shown as an investing activity on the statement of cash flows.There is no related cash flow from operating activities during Year 1.

On January 1,Year 1,Dalen Company Purchased Office Equipment That Cost