Questions: Kansas Enterprises purchased equipment for 60,000 on January 1,2024. The equipment is expected to have a five-year service life, with a residual value of 5,000 at the end of five years. Using the straight-line method, depreciation expense for 2024 would be: Multiple Choice 12,000 11,000 60,000 None of these

Solution Steps

To calculate the depreciation expense using the straight-line method, we need to follow these steps:

1. Determine the initial cost of the equipment.
2. Subtract the residual value from the initial cost to get the depreciable amount.
3. Divide the depreciable amount by the service life of the equipment to get the annual depreciation expense.

The depreciable amount is calculated by subtracting the residual value from the initial cost of the equipment: \[ \text{Depreciable Amount} = \text{Initial Cost} - \text{Residual Value} = 60000 - 5000 = 55000 \]

Using the straight-line method, the annual depreciation expense is calculated by dividing the depreciable amount by the service life of the equipment: \[ \text{Annual Depreciation Expense} = \frac{\text{Depreciable Amount}}{\text{Service Life}} = \frac{55000}{5} = 11000 \]

Final Answer