Company purchased equipment on January 1, 2017 for $600,000. The residual value is $60,000 and the estimated useful life is 10 years. What is the Depreciation Expense for the year ending December 31, 2017, if the company uses the straight-line method?

Annual depreciation 2017 = $54,000

Explanation:

Giving the following information:

The company purchased equipment on January 1, 2017, for $600,000. The residual value is $60,000 and the estimated useful life is 10 years.

Under the straight-line depreciation method, the annual depreciation is the same in all of the useful life. We need to use the following formula:

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

Annual depreciation = (600,000 - 60,000) / 10 = $54,000