Question

accounting A John Deere tractor acquired on January 4 at a cost of $120,000 has an estimated useful life of 25 years. Assume that it will have no residual value. a. Determine the depreciation for each of the first two years by the straight-line method.

Answer 1

$4,800 each

Step-by-step explanation:

The computation of the depreciation expense for the first two year under the straight-line method is shown below:

= (Original cost - residual value) ÷ (useful life)

= ($120,000 - $0) ÷ (25 years)

= ($120,000) ÷ (25 years)

= $4,800

In this method, the depreciation is same for all the remaining useful life

Hence, the depreciation of $4,800 is to be charged separately for each year