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12 September, 11:25

Emir Company purchased equipment that cost $110,000 cash on January 1, Year 1. The equipment had an expected useful life of six years and an estimated salvage value of $8,000. Emir depreciates its assets under the straight-line method. What are the amounts of depreciation expense during Year 3 and the accumulated depreciation at December 31, Year 3, respectively?

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  1. 12 September, 14:20
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    Straight line depreciation on a fixed asset like a company equipment is a method used to assign an equal amount of depreciation expense per year.

    The formula is below;

    Depreciation per year = (Cost - Salvage value) / useful life

    = (110,000 - 8,000) / 6

    = 102,000 / 6

    Depreciation = $17,000 per year

    Therefore, depreciation expense during year 3 would be $17,000 and accumulated depreciation at the end of year 3 is the addition of all the depreciation expenses for the first three years;

    Accumulated depreciation = $17,000 + $17,000 + $17,000 = $51,000
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