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27 October, 01:17

El Tapatio purchased restaurant furniture on September 1, 2021, for $43,000. Residual value at the end of an estimated 10-year service life is expected to be $5,800. Calculate depreciation expense for 2021 and 2022, using the straight-line method, and assuming a December 31 year-end.

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  1. 27 October, 04:51
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    2021 = $1,240

    2022 = $3,720

    Explanation:

    Depreciation is basically a decrease in useful life of an asset and it can be calculated by using the following formula:

    Depreciation = Cost - Residual Value/Estimated useful life

    Per year Depreciation = ($43,000 - $5,800) / 10 = $3,720

    For 2021

    As the asset is purchased on September 1, 2021 so only four months depreciation needs to be charged which is as under.

    Depreciation = $ 3,720 * 4/12 = $1,240

    2022 = $3,720

    For 2022 full twelve months depreciation needs to be charged even if the asset is idle so the total depreciation expense would be $3720
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