Fields Company purchased equipment on January 1 for $180,000. This system has a useful life of...
Fields Company purchased equipment on January 1 for $180,000. This system has a useful life of 8 years and a salvage value of $20,000. The company estimates that the equipment will produce 40,000 units over its 8-year useful life. Actual units produced are: Year 1 – 4,000 units; Year 2 – 6,000 units; Year 3 – 8,000 units; Year 4 – 5,000 units; Year 5 – 4,000 units; Year 6 – 5,000 units; Year 7 – 7,000 units; Year 8 – 3,000 units. What would be the depreciation expense for the second year of its useful life using the straight-line method?
A)20,000 B) 16,000 C) 24,000 D)45,000 D)33,750
Homework Answers
Depreciation expense = (Cost - Salvage value) / Useful life
= (180,000 - 20,000) / 8
= 160,000 / 8
= 20,000
Option A is the answer
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