Question

On January 2, 2017, the Matthews Band acquires sound equipment for concert performances at a cost of $65,800. The band estimates it will use this equipment for four years, during which time it anticipates performing about 200 concerts. It estimates that after four years it can sell the equipment for $2,000. During year 2017, the band performs 45 concerts. Compute the year 2017 depreciation using the straight-line method.

Answer 1

Answer:

Annual depreciation= $15,950

Explanation:

Giving the following information:

On January 2, 2017, the Matthews Band acquires sound equipment for concert performances for $65,800.

The band estimates it will use this equipment for four years. It estimates that after four years it can sell the equipment for $2,000.

We need to use the following formula:

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

Annual depreciation= (65,800 - 2,000)/4= $15,950