On 2015 January 1, Jackson Company purchased equipment for $440,000. The equipment has an estimated useful life of 10 years and an estimated salvage value of $40,000.
If Jackson uses the straight-line depreciation method, what is the depreciation expense for 2015?
36,000
To calculate the depreciation expense for 2015 using the straight-line depreciation method, we need to determine the depreciable cost of the equipment and then divide it by the useful life.
The depreciable cost is the original cost of the equipment minus its salvage value.
In this case:
Original cost of the equipment = $440,000
Salvage value = $40,000
Depreciable cost = Original cost - Salvage value
Depreciable cost = $440,000 - $40,000
Depreciable cost = $400,000
Now, we can calculate the yearly depreciation expense.
Depreciation expense = Depreciable cost / Useful life
Depreciation expense = $400,000 / 10
Depreciation expense = $40,000
Therefore, the depreciation expense for 2015 is $40,000.