Cutter Enterprises purchased equipment for $72,000 on January 1, 2013. The equip

Question

Cutter Enterprises purchased equipment for $72,000 on January 1, 2013. The equipment is expected to have a five-year life and a residual value of $3,900.

Using the straight-line method, depreciation for 2014 and the equipment's book value at December 31, 2014, would be:

Cutter Enterprises purchased equipment for $72,000 on January 1, 2013. The equipment is expected to have a five-year life and a residual value of $3,900.

Using the straight-line method, depreciation for 2014 and the equipment's book value at December 31, 2014, would be:

Explanation / Answer

depreciation for 2014 and the equipment's book value at December 31, 2014, would be:

Depreciation = (Cost - Salvage value) / life time = (72000 - 3900) / 5 = $13620

Hence, Depreciation for 2014 = $13620

Book Value at December 31, 2014 = $72,000 - 2 x 13620 = $44760

Hence,option C is correct

$13,620 and $44,760.

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