A company purchased equipment valued at $200,000 on January 1.The equipment has an estimated useful life of six years or 5 million units.The equipment is estimated to have a salvage value of $13,400.
-Assuming the straight-line method of depreciation,what is the depreciation for the second year?
A) $41,445.91
B)$62,137.80
C)$31,100.00
D)$55,980.00
E)$33,333.00

Question

A company purchased equipment valued at $200,000 on January 1.The equipment has an estimated useful life of six years or 5 million units.The equipment is estimated to have a salvage value of $13,400.
-Assuming the straight-line method of depreciation,what is the depreciation for the second year? 
A) $41,445.91
B)$62,137.80
C)$31,100.00
D)$55,980.00
E)$33,333.00

Quizplus · Accepted Answer

To calculate the depreciation for the second year, we need to first calculate the annual depreciation. Using the straight-line method, we can calculate the annual depreciation as follows:

Annual depreciation = (Cost - Salvage value) / Useful life
Annual depreciation = ($200,000 - $13,400) / 6
Annual depreciation = $31,100

Now, to calculate the depreciation for the second year, we simply multiply the annual depreciation by the fraction of the useful life that has elapsed. At the end of the second year, 2/6 or 1/3 of the useful life has elapsed. Therefore, the depreciation for the second year is:

Depreciation for second year = Annual depreciation x Fraction of useful life elapsed
Depreciation for second year = $31,100 x 1/3
Depreciation for second year = $10,366.67

Therefore, the correct answer is C) $31,100.00.

A Company Purchased Equipment Valued at $200,000 on January 1