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13 July, 06:18

Kansas Enterprises purchased equipment for $72,500 on January 1, 2021. The equipment is expected to have a five-year service life, with a residual value of $7,650 at the end of five years. Using the straight-line method, depreciation expense for 2021 would be:

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  1. 13 July, 06:42
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    Annual depreciation = $12,970

    Explanation:

    Giving the following information:

    Kansas Enterprises purchased equipment for $72,500 on January 1, 2021. The equipment is expected to have a five-year service life, with a residual value of $7,650 at the end of five years.

    To calculate the depreciation expense under the straight-line method, we need to use the following formula:

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

    Annual depreciation = (72,500 - 7,650) / 5

    Annual depreciation = $12,970
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