Question

On January 1, a company purchased new furniture at a cost of $29,000. The furniture is estimated to have a useful life of 5 years and a salvage value of $3,500. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the furniture for the first year ended December 31?

a.$1,450
b.$5,100
c.$5,950
d.$1,625

Answer 1

The annual depreciation expense for the furniture using the straight-line method is calculated by subtracting the salvage value from the cost and dividing by the useful life. The first year's depreciation expense is $5,100.

Step-by-step explanation:

To calculate the depreciation expense for the first year using the straight-line method, we subtract the salvage value from the cost of the furniture and then divide that amount by the useful life of the furniture. Here's the step-by-step calculation:

1. Cost of furniture: $29,000
2. Salvage value: $3,500
3. Useful life: 5 years
4. Depreciable amount: Cost of furniture - Salvage value = $29,000 - $3,500 = $25,500
5. Annual depreciation expense: Depreciable amount / Useful life = $25,500 / 5 = $5,100

Therefore, the depreciation expense for the first year ended December 31 is $5,100, which matches option b.