Question

El Tapitio purchased restaurant furniture on September 1, 2021, for $44,000. Residual value at the end of an estimated 10-year service life is expected to be $5,900. Calculate depreciation expense for 2021 and 2022, using the straight-line method, and assuming a December 31 year-end. (Do not round intermediate calculations.) 2021 2022 Depreciation expense

Answer 1

1.

Computation of depreciation expense of 2021 by using straight-line method is:

Depreciation expense of 2021 = [(Purchase value of furniture - Residual value) / Estimated service life] * (No. of months from September 1, 2021 to December 31, 2012 / 12)

= [($44,000 - $5,900) / 10] * (4/12)

= ($38,100 / 10) * (4/12)

= $3,810 * (4/12)

= $1,270

Hence, the depreciation expense of 2021 is $1,270.

2.

Computation of depreciation expense of 2022 by using straight-line method is:

Depreciation expense of 2022 = [(Purchase value of furniture - Residual value) / Estimated service life]

= [($44,000 - $5,900) / 10]

= $38,100 / 10

= $3,810

Hence, the depreciation expense of 2022 is $3,810.