Trouble Company purchased equipment on January 1, 2016, for $60,000. It is estimated that the equipment will have a $5,000 salvage value at the end of its 5-year useful life. It is

Question Completion:

It is also estimated that the equipment will produce 100,000 units over its 5-year life.

Compute depreciation expense for 2016 using the straight-line method of depreciation.

Trouble Company

The Depreciation Expense for 2016 is:

$11,000

Explanation:

a) Data and Calculations:

Cost of equipment = $60,000

Purchase date = January 1, 2016

Estimated Salvage value = $5,000

Estimated useful life = 5 years

Depreciable amount = $55,000 ($60,000 - $5,000)

Depreciation rate per year under the straight-line method = $55,000/5

= $11,000

Under the straight-line depreciation method, Trouble Company will continue to deduct $11,000 as the depreciation expense on the equipment until the end of its useful life or any other preceding event affecting the equipment.

urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total