Question

Kansas Enterprises purchased equipment for $60,000 on January 1, 2018. The equipment is expected to have a five-year life, with a residual value of $5,000 at the end of five years. Using the straight-line method, depreciation expense for 2018 would be:

$12,000.
$11,000.
$60,000.
None of these.

Answer 1

The correct answer is B: $11,000

Step-by-step explanation:

Giving the following information:

January 1, 2018:

purchase price=$60,000.

The equipment is expected to have a five-year life, with a residual value of $5,000 at the end of five years.

Depreciation= (purchase price - residual value)/ useful life

Annual Depreciation= (60000 - 5000)/5= 11000

Depreciation year 2018= $11,000

Answer 2

$ 11,000

Step-by-step explanation:

Depreciable cost = Asset Cost - Residual Value

Asset Cost - Residual Value

Useful life ( years )

( 60,000 - 5,000 ) = 55,000 = 11,000

5,000 5,000

The same value ( $ 11,000 per year ) will be the depreciation for the rest of the asset life ( 2019 to 2022 ) = $ 11,000 x 5 = $ 55,000