Question

A company purchased new furniture at a cost of $26,000 on September 30. The furniture is estimated to have a useful life of 5 years and a salvage value of $3,200. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the furniture for the first year ended December 31

Answer 1

Answer: Depreciation for 3 months  = $1140.

Explanation:

In straight line method, Depreciation for full year  = (Cost – Salvage value) ÷ useful life

Depreciation for full year = ($26,000 -$3,200 ) ÷ 5

= $(22800÷ 5)

= $ 4,560

Furniture was purchased on September 30, so depreciation will be calculated from October to December(3 months)

Depreciation for 3 months  = Yearly depreciation x ($\dfrac3{12}$)

= $4,560 x (0.25)

= $1140.

Hence, Depreciation for 3 months  = $1140.