Question

nr 110 Equipment used in testing and completing a development well cost sao. has a 10-year life with a salvage value of $5,000. The equipment is a support equipment and facilities. The equipment was used for fourm drilling Kelly #1. Ignore the wells-in-progress account and use the a final account. 1 cost $50,000 and nent is classified as ed for four months in nt and use the appropriate REQUIRED: Record depreciation.

Answer 1

Cost of the Equipment Salvage Value Useful life 50000 5000 10 years Using straight line method of depreciation, Depreciation on Equipment = Cost of Equipment - Salvage Value Useful life $50,000 - $5,000 10 = $ 4,500 per year Depreciation for 4-months = $4500 x 4/12 $ 1,500 Description LF Depreciation Equipment (To record the depreciation on equipment) Debit $ 1,500.00 Credit $ 1,500.00

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