Question

Dixie Company obtained seismic equipment on January 1,2004 , at a cost of $100,000. The equipment was used in G&G operations for the calendar year, 2004. The equipment has an estimated life of 10 years with a salvage value of $20,000. The company uses the straight-line method in computing depreciation. Record the depreciation for the year 2004.

Answer 1

The annual depreciation expense for the seismic equipment using the straight-line method is $8,000, which is the depreciation for the year 2004.

Step-by-step explanation:

To record the depreciation for the seismic equipment Dixie Company obtained, we use the straight-line method. The cost of the equipment is $100,000 and it has an estimated life of 10 years with a salvage value of $20,000. The annual depreciation expense is calculated by subtracting the salvage value from the cost and then dividing by the useful life of the asset.

Annual Depreciation Expense = (Cost - Salvage Value) / Useful Life = ($100,000 - $20,000) / 10 = $8,000

Therefore, the depreciation for the year 2004 is $8,000.