On July 1, 2019, Bronson Co. purchased some equipment that initially cost $52,800. Additional costs included freight costs $300, non-refundable taxes $6,400, and installation $500. Estimated residual value is $2,000. The company uses a straight-line rate of 10%. Bronson’s fiscal year end is June 30. Depreciation expense for the 2020 fiscal year end is

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aquialaska aquialaska · Answer 1 · 2020-05-01T08:07:34+02:00

Answer:

Depreciation Expense = $5800

Explanation:

As per the data given in the question,

Initial cost = $52,800

Freight cost = $300

Non-refundable tax = $6,400

Installation = $500

Estimated residual value = $2,000

Rate = 10%

So total cost of assets = $52,800 + $300 + $6,400 + $500

= $60,000

As per the following formula,

The straight line depreciation expense = (Cost- Residual value) × Straight line depreciation rate

=($60,000 - $2,000) × 10%

=$58,000 × 10%

=$5,800

Parrain Parrain · Answer 2 · 2021-11-25T12:56:14+01:00

Based on the cost of the equipment and other related costs as well as the residual value, the depreciation is $5,800.

The cost of the equipment includes the actual costs and everything that was spent to make it ready for use:

= Cost + Freight + Taxes + Installation

= 52,800 + 300 + 6,400 + 500

= $60,000

The depreciation is:

= (Cost - residual value) x Depreciation percentage

= (60,000 - 2,000) x 10%

= $5,800

The depreciation for 2020 is $5,800.

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