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A company purchased factory equipment on April 1, 2018 for $166000. It is estimated that the...

A company purchased factory equipment on April 1, 2018 for $166000. It is estimated that the equipment will have a $18000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2018 is

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Answer #1

Straight Line Depreciation = [Cost of the Equipment – Residual Value] / Useful Life

= [$166.000 – 18,000] / 10 Years

= $148,000 / 10 Years

= $14,800 per year

The Equipment was purchased by the company on April 1, 2018, therefore, in 2018, only 9 months Depreciation Expenses (From April 1, 2018 to December 31,2018) will be provided in the books of accounts.

The Depreciation Expense at December 31, 2018 = $14,800 x 9/12 = $11,100

“Therefore, the amount to be recorded as depreciation expense at December 31,2018 is $11,100”

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