Question

On November 1, 2016, Ivanhoe Company places a new asset into service. The cost of the asset is $70000 with an estimated 10-year life and $10000 salvage value at the end of its useful life. What is the depreciation expense for 2017 if Ivanhoe Company uses the straight-line method of depreciation

Answer 1

$6,000

Step-by-step explanation:

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

= (Original cost - salvage value) ÷ (estimated useful life)

= ($70,000 - $10,000) ÷ (10 years)

= ($60,000) ÷ (10 years)

= $6,000

Since we have to compute the depreciation for year 2017 so we take the full year depreciation i.e $6,000