Question

Mediocre corporation purchased new equipment with a cost of $450,000. the salvage value of the equipment was estimated to be $10,000. the useful life of the equipment is estimated to be 5 years. fill in the depreciation schedule below using the straight-line method of depreciation:

Answer 1

The annual depreciation expense for the equipment using the straight-line method is $88,000, resulting in a consistent depreciation expense each year for the five-year useful life.

Step-by-step explanation:

To calculate the straight-line depreciation of the equipment for Mediocre Corporation, we need to subtract the salvage value from the cost of the equipment and then divide by the useful life. The cost of the equipment is $450,000 and the estimated salvage value is $10,000, resulting in a depreciable amount of $440,000. Given a useful life of 5 years, the annual depreciation expense would be $88,000 ($440,000 / 5).

Using the straight-line method, the depreciation schedule would look like this:

• Year 1: $88,000
• Year 2: $88,000
• Year 3: $88,000
• Year 4: $88,000
• Year 5: $88,000

This schedule reflects a consistent depreciation expense each year until the end of the equipment's useful life.