Peavey Enterprises purchased a depreciable asset for $31,000 on April 1, Year 1.

Question

Peavey Enterprises purchased a depreciable asset for $31,000 on April 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $3,800, Peavey Enterprises should recognize depreciation expense in Year 2 in the amount of:

A.) $5,666.67

B.) $6,800.00

C.) $7,750.00

D.) $27,200.00

E.) $26,066.67

Peavey Enterprises purchased a depreciable asset for $31,000 on April 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $3,800, Peavey Enterprises should recognize depreciation expense in Year 2 in the amount of:

Explanation / Answer

In the year 2 full deprciation will be realised

Answer B) $6,800

Straight line depreciation = (cost - salvage value)/ estimated life

                                           = ($31,000 - $3,800) / 4

                                           = $6,800

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