Required information Use the following information for the Exercises below. [The

Question

Required information

Use the following information for the Exercises below.

[The following information applies to the questions displayed below.]

Tory Enterprises pays $258,400 for equipment that will last five years and have a $45,600 salvage value. By using the equipment in its operations for five years, the company expects to earn $90,500 annually, after deducting all expenses except depreciation.

Exercise 10-9 Straight-line depreciation and income effects LO P1

Prepare a table showing income before depreciation, depreciation expense, and net (pretax) income for each year and for the total five-year period, assuming straight-line depreciation. (Enter all amounts positive values.)

Income Before Depreciation

Depreciation Expense

Net (Pretax) Income

Year 1

Year 2

Year 3

Year 4

Year 5

Totals

$

$

$

Income Before Depreciation

Depreciation Expense

Net (Pretax) Income

Year 1

Year 2

Year 3

Year 4

Year 5

Totals

$

$

$

Explanation / Answer

Income Before Depreciation Depreciation Expense Net (Pretax) Income Year 1 90500 42560 47940 Year 2 90500 42560 47940 Year 3 90500 42560 47940 Year 4 90500 42560 47940 Year 5 90500 42560 47940 Totals 452500 212800 239700 Depreciation under straight-line method = (cost of asset-Salvage value)/Useful life = (258400-45600)/5 = $42560

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