On January 1, 2018, Orangewood Industries bought a new cash register for $7,500. Orangewood plans to use the cash register for 4 years and then sell it for $600. If Orangewood uses straight-line depreciation, depreciation expense for the year ended December 31, 2018 equals:

Question

Business

Bear

22 May, 11:16

On January 1, 2018, Orangewood Industries bought a new cash register for $7,500. Orangewood plans to use the cash register for 4 years and then sell it for $600. If Orangewood uses straight-line depreciation, depreciation expense for the year ended December 31, 2018 equals:

+2

Answers (1)

Know the Answer?

Irene Walton · Answer 1

Depreciation expense for the year ended December 31, 2018 equals: $1,725

Explanation:

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

Depreciation Expense = (Cost of asset - Residual Value) / Useful Life

In Orangewood:

Cost of ash register is $7,500. The company plans to use the cash register for 4 years and then sell it for $600, therefore, Residual Value is $600 and Useful Life is 4 years.

Depreciation Expense each year = ($7,500-$600) / 4 = $1,725

The cash register was bought on January 1, 2018. Depreciation expense for the year ended December 31, 2018 equals: $1,725