Calculate the amount of depreciation to report during the year ended December 31 for equipment that was purchased at a cost of $25,000 on October 1. The equipment has an estimated residual value of $5,000 and an estimated useful life of five years or 20,000 hours. Assume the equipment was used for 1,000 hours from October 1 to December 31 and the company uses (a) straight-line(Do not round intermediate calculations.)
Straight line method ?
Answer
the amount of depreciation to report during the year ended December 31=$ 1000
Working notes for the above answer is as under
Depreciation as per straight line is calculated as follow
Depreciation = COst-salvegevalue / Total hours during the life
= 25000 -5000 / 20000 hours
=20,000 / 20,000 hours
=$ 1 per hour depreciation
Here in this case ,we have been given that equipment was used for 1,000 hours from October 1 to December 31 and the company uses
(a) straight-line
= 1000 hour * =$ 1 per hour depreciation
=1000 *1
=$ 1000
