Question

On January 2, 2017, the Matthews Band acquires sound equipment for concert performances at a cost of $67,800. The band estimates it will use this equipment for five years, during which time it anticipates performing about 200 concerts. It estimates that after five years it can sell the equipment for $2,000. During year 2017, the band performs 45 concerts. Compute the year 2017 depreciation using the straight-line method.

Answer 1

Annual depreciation= $13,160

Step-by-step explanation:

Giving the following information:

Purchase price= $67,800.

Useful life in years= 5 years

Salvage value= $2,000.

To calculate the annual depreciation under the straight line method, we need to use the following formula:

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (67,800 - 2,000) / 5

Annual depreciation= $13,160