Question

A company purchased factory equipment on June 1, 2021, for $173000. It is estimated that the equipment will have a $8600 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2021, is $16440. $9590. $8220. $6850.

Answer 1

The amount to be recorded as depreciation expense on December 31, 2021, is (B) $9,590.

What is depreciation expense?

• Depreciation expense is the cost of a depreciated asset for a specific period, and it reveals how much of the asset's value was used up in that year.
• Accumulated depreciation is the entire amount of depreciation expense given to an asset since it was placed in service.
• A business spends $84,000 on new display racks with a useful life of 7 years (84 months) and no residual value.
• The corporation would most likely choose a straight-line depreciation technique, which would result in a $1,000 monthly depreciation expenditure ($84,000/84 months = $1,000 per month).

The straight-line technique of calculating depreciation expense is given below:

• = (Original cost - salvage value) ÷ (useful life)
• = ($173,000 - $8,600) ÷ (10 years)
• = ($164,400,000) ÷ (10 years)  
• = $16,440

In this method, the depreciation is the same for all the remaining useful life.

Now for the 7 months, the depreciation expense would be:

• = $16,440 × 7 months÷ 12 months
• = $9,590

Therefore, the amount to be recorded as depreciation expense on December 31, 2021, is (B) $9,590.

Know more about depreciation expenses here:

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The correct question is given below:

A company purchased factory equipment on June 1, 2021, for $173000. It is estimated that the equipment will have a $8600 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2021, is ______.

(A) $16440.

(B)$9590.

(C)$8220.

(D)$6850.