On January 1, Year 1, Anon Company paid $110,000 cash to purchase equipment. The equipment had an expected useful life of six years and an estimated salvage value of $8,000. Assuming that Anon depreciates its assets using the straight-line method of depreciation, the amount of depreciation expense appearing on the Year 4 income statement and the amount of accumulated depreciation appearing on the December 31, Year 4, balance sheet would be .

Part 1. The amount of depreciation expense appearing on the Year 4 income statement is $17,000

Part 2. The amount of accumulated depreciation appearing on the December 31, Year 4 is $ 68,000

Explanation:

Part 1. The amount of depreciation expense appearing on the Year 4 income statement

Anon depreciates its assets using the straight-line method of depreciation. This means that the depreciation expense will be the same for every year.

The Depreciation expense is calculated as:

=(Cost - Salvage Value)/ Number of Useful Life

=($110,000 - $8,000) / 6 years

= $17,000

Thus depreciation expense in year 4 is $17,000

Part 2. The amount of accumulated depreciation appearing on the December 31, Year 4

Accumulated Depreciation is the Total Depreciation Charge on the Asset to date.

Total Depreciation Charge (Accumulated Depreciation) in year 4 is thus:

$17,000 × 4 years

$ 68,000

Thus Accumulated Depreciation is $ 68,000

c.

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