On January 1,2011,Fred McGriff Company bought office computers that cost $43,000,with an estimated useful life of 10 years and an estimated salvage value of $3,000.The company uses the straight-line method of depreciation and has a calendar year end.For the year ended December 31,2012,McGriff Company will report depreciation expense of ________ on the ________.

Question

Quizplus · Accepted Answer

Straight-line method of depreciation is used, so the depreciation expense is calculated as (cost of asset - salvage value) / useful life.

Therefore, depreciation expense for 2012 = ($43,000 - $3,000) / 10 = $4,000.

Depreciation expense is reported on the income statement as an expense for the year, not on the statement of cash flows.

On January 1,2011,Fred McGriff Company Bought Office Computers That Cost