Question

Redeker Company purchased equipment on January 1, 2016, for $90,000. It is estimated that the equipment will have a $5,000 salvage value at the end of its 5-year useful life. It is also estimated that the equipment will produce 100,000 units over its 5-year life. 16,000 units of product are produced in 2016 and 24,000 units are produced in 2017.

Compute the amount of depreciation expense for the year ended December 31, 2016, using the straight-line method of depreciation.

Answer 1

$17,000

Step-by-step explanation:

The computation of the amount of the depreciation expense using the straight-line method is shown below:

= (Purchase value of an equipment - estimate salvage value) ÷ (useful life)

= ($90,000 - $5,000) ÷ (5 years)

= ($85,000) ÷ (5 years)

= $17,000

All other information which is given is not relevant. Hence, ignored it