Emir Company purchased equipment that cost $110,000 cash on January 1, Year 1. The equipment had an expected useful life of six years and an estimated salvage value of $8,000. Emir depreciates its assets under the straight-line method. What are the amounts of depreciation expense during Year 3 and the accumulated depreciation at December 31, Year 3, respectively?

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Business

Valeria Spencer

12 September, 15:38

Emir Company purchased equipment that cost $110,000 cash on January 1, Year 1. The equipment had an expected useful life of six years and an estimated salvage value of $8,000. Emir depreciates its assets under the straight-line method. What are the amounts of depreciation expense during Year 3 and the accumulated depreciation at December 31, Year 3, respectively?

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Wiley · Answer 1

Straight line depreciation on a fixed asset like a company equipment is a method used to assign an equal amount of depreciation expense per year.

The formula is below;

Depreciation per year = (Cost - Salvage value) / useful life

= (110,000 - 8,000) / 6

= 102,000 / 6

Depreciation = $17,000 per year

Therefore, depreciation expense during year 3 would be $17,000 and accumulated depreciation at the end of year 3 is the addition of all the depreciation expenses for the first three years;

Accumulated depreciation = $17,000 + $17,000 + $17,000 = $51,000