Question

At the beginning of year 1, kuhn corp. purchases equipment for $22,000. the equipment has a residual value of $2,000 and an expected useful life of 5 years. what is straight-line depreciation expense for year 3?

a. $4,200
b. $8,800
c. $8,000
d. $4,000

Answer 1

The straight-line depreciation expense for year 3 is $4,000. The correct answer is d. $4,000.

To calculate straight-line depreciation, you can use the formula:

Depreciation Expense= Cost−Residual Value/ Useful Life

​In this case:

Cost of the equipment = $22,000

Residual Value = $2,000

Useful Life = 5 years

`\text{Depreciation Expense} = (22,000 - 2,000)/(5)\\\text{Depreciation Expense} = (20,000)/(5)\\\text{Depreciation Expense} = 4,000`

Therefore, the straight-line depreciation expense for year 3 is $4,000. The correct answer is d. $4,000.