Taco Hut purchased equipment on May 1, 2018, for $15,000. Residual value at the end of an estimated 8-year service life is expected to be $4,000.

Calculate depreciation expense using the straight-line method for 2018 and 2019, assuming a December 31 year-end. (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar.)

2018: 8 months

Depreciation = $916,67

2019: full year

Depreciation = $1375

Explanation:

Giving the following information:

Taco Hut purchased equipment on May 1, 2018.

Price: $15,000.

Residual value: $4,000

Useful life: 8 year

We need to calculate the depreciation for 2018 and 2019 using straight-line method:

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

Depreciation = (15000-4000) / 8 = $1375

2018: 8 months

Depreciation = (1375/12) * 8 = 916,67

2019: full year

Depreciation = $1375