Question

On January 1, Able Company purchased equipment costing $135,000 with an estimated salvage value of $10,500, and an estimated useful life of five years. Using the straight-line method, what is the amount that should be recorded as depreciation on December 31?

a. $135,000
b. $24.900
c. $124,500
d. $27,000

Answer 1

Depreciation = $24900

Step-by-step explanation:

Below is the calculation of depreciation:

Cost of equipment = $135000

Salvage value = $10500

Useful life = 5 years

Depreciation = (Cost of machine - salvage value) / useful life

Depreciation = (135000 - 10500) / 5

Depreciation = $24900