A company purchased new furniture at a cost of $20,000 on September 30

Accounting Dec 01, 2020

A company purchased new furniture at a cost of $20,000 on September 30. The furniture is estimated to have a useful life of 10 years and a salvage value of $5,000. The company used a straight-line method of depreciation. How much depreciation expense will be recorded for the furniture for the first year ended Dec 31?

Expert Solution

Depreciation Expense = (Cost - Salvage Value)/ Useful life

=(20000 - 5000)/10

=15000/10

=1500

Depreciation per year = $1500

The furniture purchased on September 30

In the first year the furniture was used only for 3 months i.e from October 1 to December 31

Therefore Depreciation Expense for the first year ended 31 Dec = $1500*3/12 = $375

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