Question

1. A county acquires equipment for $16,000,000 at the beginning of 2015. The equipment has an 8-year life, no residual value. At the beginning of 2021 (6 years later), the equipment is sold for $9,000,000. Use straight-line depreciation, if appropriate. The equipment is used for general operations and is reported in the general fund. What is reported in the general fund's operating statement, related to this equipment, in 2015? A. Expense of $16,000,000 B. The equipment is not reported in the operating statement C. Expense of $2,000,000 D. Expenditure of $16,000,000

Answer 1

C). Expense of $2,000,000

Step-by-step explanation:

Straight line depreciation =

( Cost - salvage value ) / useful life

( 16,000,000-0 ) / 8 = 2,000,000

Answer 2

Is reported a Depreciation expense of $ 2,000,000 in the general fund's operating statement, related to this equipment, in 2015. The right answer is C

Step-by-step explanation:

According to the given data we have the following:

equipment cost at the beginning of 2015=$16,000,000

equipment useful life=8-year

Therefore in order to to calculate what is reported in the general fund's operating statement, related to this equipment, in 2015 we would have to calculate the straight line depreciation with the following formula:

Straight line depreciation =( Cost - salvage value ) / useful life

Straight line depreciation = ( $16,000,000-0 ) / 8

Straight line depreciation =$ 2,000,000

Therefore, is reported a Depreciation expense of $ 2,000,000 in the general fund's operating statement, related to this equipment, in 2015