Question

QS 8-3 Straight-line depreciation LO P1 On January 2, 2017, the Matthews Band acquires sound equipment for concert performances at a cost of $69,200. 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 $1,000. During year 2017, the band performs 45 concerts. Compute the year 2017 depreciation using the straight-line method.

Answer 1

Answer:

Annual depreciation= 17,050

Explanation:

Giving the following information:

Purchase price= 69,200

Useful life= 4

Salvage value= 1,000

To calculate the depreciation expense under the straight-line method, we need to use the following formula:

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

Annual depreciation= (69,200 - 1,000)/4

Annual depreciation= 17,050