Question

Selected ledger account balances for business solutions follow. For the three months ended December 31, 2021, and for the three months ended March 31, 2022, the balances are as follows:

Office Equipment: 8,000 (December 31, 2021) and8,000 (March 31, 2022)
Accumulated Depreciation–Office Equipment: 400 (December 31, 2021) and800 (March 31, 2022)
Computer Equipment: 20,000 (December 31, 2021) and20,000 (March 31, 2022)
Accumulated Depreciation–Computer Equipment: 1,250 (December 31, 2021) and2,500 (March 31, 2022)
Total Revenue: 31,284 (December 31, 2021) and44,000 (March 31, 2022)
Total Assets: 83,460 (December 31, 2021) and120,268 (March 31, 2022)

Assuming that Business Solutions does not acquire additional office equipment or computer equipment in 2022, compute the amounts for the year ended December 31, 2022, for:

1. Depreciation Expense–Office Equipment
2. Depreciation Expense–Computer Equipment

Use the straight-line method of depreciation.

Answer 1

For Business Solutions, the annual Depreciation Expense–Office Equipment is $1,600, and the Depreciation Expense–Computer Equipment is $5,000 for the year ended December 31, 2022, calculated using the straight-line method based on the changes in accumulated depreciation.

Step-by-step explanation:

To calculate the depreciation expense for office equipment and computer equipment for Business Solutions for the year ended December 31, 2022, using the straight-line method of depreciation, we will look at the changes in the accumulated depreciation from December 31, 2021, to March 31, 2022, for each type of equipment. The depreciation expense is the increase in accumulated depreciation over a period.

1. Depreciation Expense–Office Equipment: The accumulated depreciation increased by $400 (from $400 on December 31, 2021, to $800 on March 31, 2022). This $400 is the amount of depreciation for three months. Thus, for 12 months, the depreciation expense would be $400 x 4 = $1,600.

2. Depreciation Expense–Computer Equipment: The accumulated depreciation increased by $1,250 (from $1,250 on December 31, 2021, to $2,500 on March 31, 2022). This $1,250 is the amount of depreciation for three months. Hence, the annual depreciation expense would be $1,250 x 4 = $5,000.

Assuming no additional purchases or disposals of equipment have been made throughout the year, these calculated amounts represent the annual depreciation expenses for office and computer equipment for the year ended December 31, 2022, using the straight-line method.