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14 January, 17:46

Scroll purchased equipment from Pirn for $36,000 on January 1, 20X1, that is depreciated using the straight-line method over four years. What amount should be reported as depreciation expense in Pirn's 20X1 consolidated income statement?

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  1. 14 January, 20:40
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    Annual depreciation = $9,000 per year

    Explanation:

    Giving the following information:

    Scroll purchased equipment from Pirn for $36,000 on January 1, 20X1, that is depreciated using the straight-line method over four years.

    I will assume that the salvage value is cero. Using the straight-line method, we can calculate the annual depreciation using the following formula:

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

    Annual depreciation = (36,000 - 0) / 4 = $9,000 per year
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