Question

Kansas Enterprises purchased equipment for $60,000 on January 1, 2021. The equipment is expected to have...

Kansas Enterprises purchased equipment for $60,000 on January 1, 2021. The equipment is expected to have a five-year service life, with a residual value of $5,000 at the end of five years.

Using the straight-line method, depreciation expense for 2022 and the book value at December 31, 2022, would be:

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Answer #1

Ans:-

Given information is related to Kansas Enterprises.

Depreciation under straight line method

= (Cost of asset - scrap value)/useful life

We know,

Cost of asset =$60,000

Scrap value. =$5,000

Useful life. =5 years

Depreciation. = ($60,000-$5,000)/5

=$55,000/5

=$11,000

Depreciation expense for every year is $11,000

Depreciation expense for the year 2020 is $11,000

Book value at December 31st 2020

= Book value in 2019-depreciation for 2019-depreciation for 2020

=$60,000-$11,000-$11,000

=$38,000

Therefore book value of the equipment at December 31st 2020 is $38,000.

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