El Tapatio purchased restaurant furniture on September 1, 2018, for $31,000. Residual value at the end of an estimated 10-year service life is expected to be $4,600. Calculate depreciation expense for 2018 and 2019, using the straight-line method, and assuming a December 31 year-end.

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Business

Harrison Sweeney

19 June, 23:11

El Tapatio purchased restaurant furniture on September 1, 2018, for $31,000. Residual value at the end of an estimated 10-year service life is expected to be $4,600. Calculate depreciation expense for 2018 and 2019, using the straight-line method, and assuming a December 31 year-end.

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Isaiah Faulkner · Answer 1

Depreciation expense for 2018 was $880

Depreciation expense for 2019 was $2,640

Explanation:

The company uses straight-line depreciation method, Depreciation Expense each year is calculated by following formula:

Annual Depreciation Expense = (Cost of furniture - Residual Value) / Useful Life = ($31,000-$4,600) / 10 = $2,640

Depreciation Expense per month = $2,640/12 = $220

Depreciation Expense for 2018 (from September 1, 2018 to December 31, 2018) = $220 x 4 = $880

Depreciation Expense for 2019 = $2,640