Question

Question 33 (1 point) Cutter Enterprises purchased equipment for $72,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $6.000. Using the straight-line method, depreciation for 2019 and the equipment's book value at December 31, 2019, would be: $14,400 and $43,200 respectively. $28,800 and $37,200 respectively. $13,200 and $39.600 respectively. $13,200 and $45,600 respectively.

Answer 1

Cost of Equipment = $72,000

Residual value = $6,000

Depreciation expense under straight-line method = [cost - residual value] / useful life

Depreciation expense under straight-line method = ($72,000 - $6,000] / 5

Depreciation expense under straight-line method = $13,200

So, Depreciation expense per year = $13,200

So, Depreciation expense for 2019 = $13,200

Book value at the end of 2019 = $72,000 - ($13,200 * 2 years)

Book value at the end of 2019 = $45,600

$13,200 and $45,600 respectively