Question

Super Saver Groceries purchased store equipment for $40,000. Super Saver estimates that at the end of its 10-year service life, the equipment will be worth $3,000. During the 10-year period, the company expects to use the equipment for a total of 10,000 hours. Super Saver used the equipment for 1,200 hours the first year. Required: Calculate depreciation expense of the equipment for the first year, using each of the following methods. (Do not round your intermediate calculations.) rev: 04_08_2019_QC_CS-164618 1. Straight-line.

Answer 1

Annual depreciation= $3,700

Step-by-step explanation:

Giving the following information:

Super Saver Groceries purchased store equipment for $40,000. Super Saver estimates that at the end of its 10-year service life, the equipment will be worth $3,000.

To calculate the depreciation expense under the straight-line method, we need to use the following formula:

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (40,000 - 3,000)/10= $3,700