Question

On January 1, Busy Beaver, Inc., signed a $315,000, 5-year note payable to buy a new industrial veneer cutter. Busy Beaver plans to use the machine for 10 years and then sell it for its scrap value of $5,000. Using straight-line depreciation, Depreciation Expense for the 1st year ended December 31 equals ______.

Answer 1

Using straight-line depreciation, Depreciation Expense for the 1st year ended December 31 equals: $31,000.

Using this formula

Depreciation expense=(Cost-Scrap value)/Useful life

Let plug in the formula

Depreciation expense=($315,000-$5,000)/10 years

Depreciation expense=$310,000/10 years

Depreciation expense=$31,000

Inconclusion using straight-line depreciation, Depreciation Expense for the 1st year ended December 31 equals: $31,000.

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