Question

Kansas Enterprises purchased equipment for $60,000 on January 1, 2018. The equipment is expected to have a five-year life, with a residual value of $5,000 at the end of five years. Using the straight-line method, depreciation expense for 2018 would be:
$12,000.
$11,000.
$60,000.
None of these.

Answer 1

Answer:

$ 11,000

Explanation:

Depreciable cost  =  Asset Cost - Residual Value

        Asset Cost - Residual Value    

                  Useful life ( years )

           ( 60,000 - 5,000 )     =    55,000    =  11,000  

                      5,000                     5,000

The same value ( $ 11,000 per year ) will be the depreciation for the rest of the asset life ( 2019 to 2022 )  = $ 11,000 x 5 = $ 55,000

Answer 2

Answer:

The correct answer is B: $11,000

Explanation:

Giving the following information:

January 1, 2018:

purchase price=$60,000.

The equipment is expected to have a five-year life, with a residual value of $5,000 at the end of five years.

Depreciation= (purchase price - residual value)/ useful life

Annual Depreciation= (60000 - 5000)/5= 11000

Depreciation year 2018= $11,000