Question

On June 30 of the current year the company purchased Equipment costing $110,000, having a salvage value of $10,000 and a 5-year life. The company uses the straight line method of depreciation. On December 31, the adjusting entry would include a

Answer 1

$10,000

Step-by-step explanation:

Given that

Cost of equipment = 110,000

Salvage value = 10,000

Useful life = 5 years

Using straight line method

Depreciation = cost of equipment - salvage value ÷ useful years

= 110000 - 10000 ÷ 5

= 100000 ÷ 5

= $20000

Thus

By December 31

Entry of depreciation = 6/12 × 20000

= $10,000