Question

On October 2, 2019, Dave acquired and placed into service 5-year business equipment costing $70,000. No other acquisitions were made during the year. Dave does not apply Sec. 179 expensing or bonus depreciation. The depreciation for this year is?

Answer 1

Answer:

$3,500

Explanation:

Data provided in the question:

Useful life = 5 years

Cost of the equipment = $70,000

Salvage value = 0

Life elapsed in the year = 3 months    [from October to 31 December ]

Now,

Annual depreciation = [ Cost - Salvage value ] ÷ Useful life

= [ $70,000 - 0 ] ÷ 5

= $14,000 per year

Thus,

the accumulated depreciation for the year i.e for 3 months

= Annual depreciation × Life elapsed

= $14,000 per year × $\frac{3}{12}$ year

= $3,500