Kansas Enterprises purchased equipment for $80,000 on January 1, 2018. The equipment is expected to have a ten-year life, with a residual value of $6,000 at the end of ten years. Using the straight-line method, the book value at December 31, 2018 would be:

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Business

Kason

26 March, 00:58

Kansas Enterprises purchased equipment for $80,000 on January 1, 2018. The equipment is expected to have a ten-year life, with a residual value of $6,000 at the end of ten years. Using the straight-line method, the book value at December 31, 2018 would be:

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Abdullah · Answer 1

The book value at December 31, 2018 would be $72,600

Explanation:

Kansas Enterprises uses straight-line depreciation method, Depreciation Expense per year is calculated by following formula:

Annual Depreciation Expense = (Cost of equipment - Residual Value) / Useful Life = ($80,000 - $6,000) / 10 = $7,400

Depreciation Expense for 2018 was $7,400

At December 31, 2018,

Accumulated depreciation = $7,400

Book vale of the equipment = Cost of equipment - Accumulated depreciation = $80,000 - $7,400 = $72,600