Question

Whole Foods, the world’s leader in natural and organic foods, is celebrating 18 consecutive years on Fortune's "100 Best Companies to Work For" list. A store opens in Houston, Texas, in April 2015 at a new Voss location. A commercial oven for $8,255 with a 5-year life and residual value of $1,280 was purchased for the store. What is the depreciation expense in year 2 for the oven? Use the straight-line method. Depreciation expense

Answer 1

The second year depreciation expense is $1,395

Step-by-step explanation:

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

= (Original cost - residual value) ÷ (useful life)

= ($8,255 - $1,280) ÷ (5 years)

= ($6,975) ÷ (5 years)

= $1,395

Under this method, the depreciation expense would be the same for all the remaining useful life

hence, the second year depreciation expense is $1,395