Question

Disposal of Fixed Asset Equipment acquired on January 6 at a cost of $375,000 has an estimated useful life of 20 years and an estimated residual value of $25,000. a. What was the annual amount of depreciation for the Years 1-3 using the straight-line method of depreciation

Answer 1

Answer:

Annual depreciation= $17,500

Explanation:

Giving the following information:

Purchase price= $375,000

Useful life= 20 years

Salvage value= $25,000

To calculate the depreciation expense, we need to use the following formula:

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (375,000 - 25,000) / 20

Annual depreciation= $17,500