Ask Question
19 May, 12:48

A company purchased new furniture at a cost of $31,000 on September 30. The furniture is estimated to have a useful life of 5 years and a salvage value of $3,700. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the furniture for the first year ended December 31

+5
Answers (1)
  1. 19 May, 13:03
    0
    Answer: The depreciation expense that will be recorded for the furniture for the year ended, December 31 is $1,365.

    Explanation: The formula for straight-line depreciation method is given below:

    (Historical cost minus salvage value) / No of years

    Historical cost is the original purchase price Salvage value is the disposable value of the asset

    If you put in the information in the question into the formula, you have:

    ($31,000 - $3,700) / 5 years = $5,460 yearly depreciation

    We need to get the depreciation expense as at December 31. This means the yearly depreciation above has to be pro rated for 3 months, as follows:

    $5,460 x 3/12 = $1,365.

    Entries to be recorded would be Debit Depreciation expense $1,365; Credit Accumulated depreciation $1,365. In most cases, organizations record depreciation expense on a monthly basis.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “A company purchased new furniture at a cost of $31,000 on September 30. The furniture is estimated to have a useful life of 5 years and a ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers