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Leo's Lawncare purchased equipment on January 1. The cost was $15,000, and the equipment had a residual value [salvage value] of $5,000. The equipment was given a useful life of 10 years. After the end of two years, it was determined that the equipment would be obsolete in 5 more years and the residual value would still be $5,000. What will be the depreciation under the straight-line method to the nearest dollar be for the third year

Respuesta :

Answer:

$1,600

Explanation:

The computation of the depreciation expense for the third year is shown below:

The yearly depreciation expense is

= ($15,000 - $5,000) ÷ $10

= $1,000

For two years is should be

= $1,000 × 2

= $2,000

Now the depreciation expense for the third year is

= ($15,000 - $2,000 - $5,000) ÷  5 years

=  $1,600