Question

Suburban Production, Inc. purchased a piece of display equipment that cost $20,500. The display equipment has an estimated useful life of 4 years and a residual value of $2500. Using the straight-line method of depreciation, calculate the following for the first two years. (If necessary, round your answers to the nearest cent.) Annual depreciation expense. Accumulated depreciation at year-end. Book value at year-end.

Answer 1

Annual depreciation expenses is
[Equipment cost-residual value]÷estimated useful life

Annual depreciation expenses
(20,500−2,500)÷4=4,500

Accumulated depreciation at the end of 2 years I
4,500×2=9,000

Book value at the end of 2 years is
20,500−9,000=11,500