On January 2, 2009, the Deadra Band acquires sound equipment for concert perform

Question

On January 2, 2009, the Deadra Band acquires sound equipment for concert performances at a cost of $32,500. The band estimates it will use this equipment for four years, during which time it anticipates performing about 200 concerts. It estimates that after four years it can sell the equipment for $2,500. During year 2009, the band performs 47 concerts. Compute the year 2009 depreciation using the straight-line method.



*Please explain how you get your answer and make sure it is 100% correct.


Thank you,

Explanation / Answer

Purchase cost = 32,500 Concerts expected in 4 years = 200 Value after 4 years = 2,500 Concerts in 2009 = 47 Depreciation in 4 years = 32,500-2,500 = 30,000 Expected depreciation per concert = 30,000/200 = 150 Depreciation in 2009 = 150*47 = 7,050 In 2009 value reduced by = 32,500-7050 = 25,450

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