New equipment was purchased on January 1 for $144,000. It has a salvage value of $28,000 and a useful life of 10 years. To the nearest dollar, how much will the depreciation expense for the equipment be for the first year using the straight-line method?

Question

Quizplus · Accepted Answer

To calculate the depreciation expense using the straight-line method, we need to subtract the salvage value from the cost of the asset and divide the result by the useful life.

Cost of asset - Salvage value = Depreciable cost
$144,000 - $28,000 = $116,000

Depreciable cost / Useful life = Depreciation expense per year
$116,000 / 10 = $11,600

Therefore, the depreciation expense for the equipment for the first year using the straight-line method is $11,600.

Option D is the correct answer.

New Equipment Was Purchased on January 1 for $144,000