Question

Assuming the asset's salvage value is $3,700, Peavey Enterprises should recognize depreciation expense in Year 2 in the amount of:

Answer 1

$6,700

Step-by-step explanation:

The computation of the depreciation expense for the year 2 using the straight line method is shown below:

Depreciation expense under Straight-line method would be

= (Purchase value of an assets - residual value) ÷ (estimated useful life)

= ($30,500 - $3,700) ÷ (4 years)

= $26,800 ÷ 4 years

= $6,700

In the straight-line method, the depreciation expense should be the same for the useful life