Scroll purchased equipment from Pirn for $36,000 on January 1, 20X1, that is depreciated using the straight-line method over four years. What amount should be reported as depreciation expense in Pirn's 20X1 consolidated income statement?

Question

Business

Audrey Wagner

1 August, 00:23

Scroll purchased equipment from Pirn for $36,000 on January 1, 20X1, that is depreciated using the straight-line method over four years. What amount should be reported as depreciation expense in Pirn's 20X1 consolidated income statement?

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Answers (1)

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Ryann Watkins · Answer 1

Annual depreciation = $9,000 per year

Explanation:

Giving the following information:

Scroll purchased equipment from Pirn for $36,000 on January 1, 20X1, that is depreciated using the straight-line method over four years.

I will assume that the salvage value is cero. Using the straight-line method, we can calculate the annual depreciation using the following formula:

Annual depreciation = (original cost - salvage value) / estimated life (years)

Annual depreciation = (36,000 - 0) / 4 = $9,000 per year