On January 1, Year 1, Stewart Corporation purchased equipment with a list price of $120,000. A discount of 2% was granted on the equipment; the shipping terms were FOB shipping point, and the transportation cost was $3,000. Installation and testing costs amounted to $4,000. The equipment had an estimated useful life of 4 years and salvage value of $10,000. At the beginning of Year 3, Stewart revised the expected life of the asset to six years and the salvage value to $12,000.
Required:
Compute the depreciation expense using straight-line method for each of the six years and in total.

Question

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The Answer of On January 1, Year 1, Stewart Corporation purchased equipment with a list price of $120,000. A discount of 2% was granted on the equipment; the shipping terms were FOB shipping point, and the transportation cost was $3,000. Installation and testing costs amounted to $4,000. The equipment had an estimated useful life of 4 years and salvage value of $10,000. At the beginning of Year 3, Stewart revised the expected life of the asset to six years and the salvage value to $12,000.
Required:
Compute the depreciation expense using straight-line method for each of the six years and in total.

On January 1, Year 1, Stewart Corporation Purchased Equipment with a List