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Trouble Company purchased equipment on January 1, 2016, for $60,000. It is estimated that the equipment will have a $5,000 salvage value at the end of its 5-year useful life. It is

User BishopZ
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It is also estimated that the equipment will produce 100,000 units over its 5-year life.

Compute depreciation expense for 2016 using the straight-line method of depreciation.

Answer:

Trouble Company

The Depreciation Expense for 2016 is:

$11,000

Step-by-step explanation:

a) Data and Calculations:

Cost of equipment = $60,000

Purchase date = January 1, 2016

Estimated Salvage value = $5,000

Estimated useful life = 5 years

Depreciable amount = $55,000 ($60,000 - $5,000)

Depreciation rate per year under the straight-line method = $55,000/5

= $11,000

Under the straight-line depreciation method, Trouble Company will continue to deduct $11,000 as the depreciation expense on the equipment until the end of its useful life or any other preceding event affecting the equipment.

User Mayank Sharma
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