Question

On January 1, 2018, Ace Electronics bought a new cash register for $2,500. Ace plans to use the cash register for 4 years and then sell it for $200. If Ace uses straight-line depreciation, depreciation expense for the year ended December 31, 2018 equals ______.

Answer 1

Answer:

$575

Explanation:

The computation of the depreciation expense is shown below:

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

= ($2,500 - $200) ÷ (4 years)

= ($2,300) ÷ (4 years)  

= $575

In this method, the depreciation expense is the same for all the remaining useful life  i.e for four years, the $575 should be charged for all four years