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23 August, 13:13

El Tapatio purchased restaurant furniture on September 1, 2018, for $31,000. Residual value at the end of an estimated 10-year service life is expected to be $4,600. Calculate depreciation expense for 2018 and 2019, using the straight-line method, and assuming a December 31 year-end.

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  1. 23 August, 16:41
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    Depreciation expense for 2018 was $880

    Depreciation expense for 2019 was $2,640

    Explanation:

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

    Annual Depreciation Expense = (Cost of furniture - Residual Value) / Useful Life = ($31,000-$4,600) / 10 = $2,640

    Depreciation Expense per month = $2,640/12 = $220

    Depreciation Expense for 2018 (from September 1, 2018 to December 31, 2018) = $220 x 4 = $880

    Depreciation Expense for 2019 = $2,640
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