Question

Equipment was purchased for $60,000 on January 1, 2018. Related freight charges amounted to $2,800 and there was a cost of $8,000 for installing and testing the equipment. It is estimated that the equipment will have a $12,000 salvage value at the end of its 5-year useful life. How much is depreciation expense in 2018?

Answer 1

Depreciation = 11,760

Step-by-step explanation:

given data

purchased = $60,000

freight charges = $2,800

installing and testing = $8,000

salvage value = $12,000

time period = 5 year

solution

we get Cost of Equipment that is

Cost of Equipment = 60,000 + 2,800 + 8,000

Cost of Equipment =70,800

so Depreciation will be here

Depreciation = Cost of Equipment - salvage value ÷ time period

Depreciation =
`(70,800 - 12,000)/(5)`

Depreciation = 11,760