Answer:
The depreciation expense for 2011 = $13,200
The Book value on December 31, 2011 = $45,600
Explanation:
Data provided in the question:
Cost of the equipment purchased = $72,000
Residual value = $6,000
Useful life = 5 years
now,
Using the straight-line method of depreciation
The annual depreciation = ( Cost - residual value ) ÷ ( Useful life )
= ( $72,000 - $6,000 ) ÷ 5
= $13,200
Therefore,
The depreciation expense for 2011 = Annual depreciation
= $13,200
Now,
accumulated depreciation on December 31, 2011
= Annual depreciation × Number of years passed
= $13,200 × 2
= $26,400
Therefore,
The Book value on December 31, 2011
= Purchasing cost - accumulated depreciation
= $72,000 - $26,400
= $45,600
