El Tapatio purchased restaurant furniture on September 1, 2021, for $43,000. Residual value at the end of an estimated 10-year service life is expected to be $5,800. Calculate depreciation expense for 2021 and 2022, using the straight-line method, and assuming a December 31 year-end.

2021 = $1,240

2022 = $3,720

Explanation:

Depreciation is basically a decrease in useful life of an asset and it can be calculated by using the following formula:

Depreciation = Cost - Residual Value/Estimated useful life

Per year Depreciation = ($43,000 - $5,800) / 10 = $3,720

For 2021

As the asset is purchased on September 1, 2021 so only four months depreciation needs to be charged which is as under.

Depreciation = $ 3,720 * 4/12 = $1,240

2022 = $3,720

For 2022 full twelve months depreciation needs to be charged even if the asset is idle so the total depreciation expense would be $3720