On January 1, the Matthews Band pays $66,800 for sound equipment. The band estimates it will use this equipment for four years and perform 200 concerts. It estimates that after four years it can sell the equipment for $1,000. During the first year, the band performs 45 concerts. Compute the first-year depreciation using the straight-line method. Straight-Line Depreciation Choose Numerator: Annual Depreciation Expense Choose Denominator: Beginning book value Estimated useful life (years) Depreciation expense %D 2$ 66,800/ 1,000 24 %3D 4: II
On January 1, the Matthews Band pays $66,800 for sound equipment. The band estimates it will use this equipment for four years and perform 200 concerts. It estimates that after four years it can sell the equipment for $1,000. During the first year, the band performs 45 concerts. Compute the first-year depreciation using the straight-line method. Straight-Line Depreciation Choose Numerator: Annual Depreciation Expense Choose Denominator: Beginning book value Estimated useful life (years) Depreciation expense %D 2$ 66,800/ 1,000 24 %3D 4: II
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:On January 1, the Matthews Band pays $66,800 for sound equipment. The band estimates it will use this equipment for four years and
perform 200 concerts. It estimates that after four years it can sell the equipment for $1,000. During the first year, the band performs 45
concerts.
Compute the first-year depreciation using the straight-line method.
Straight-Line Depreciation
Choose Numerator:
Annual Depreciation
Expense
Choose Denominator:
Beginning book value
Estimated useful life (years)
Depreciation expense
%D
2$
66,800/
1,000
24
%3D
4:
II
Expert Solution
Step 1
Depreciation means the loss in value of assets because of usage of assets , passage of time or change in technology.
Depreciation can not be charged in books of account until the fixed asset is ready to use.
Straight line method means where same amount of depreciation is charged every year.
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