On January 2, 2011, the Crossover Band acquires sound equipment for concert perf

Question

On January 2, 2011, the Crossover Band acquires sound equipment for concert performances at a cost of $55,900. The band estimates it will use this equipment for four years, during which time it anticipates performing about 120 concerts. It estimates that after four years it can sell the equipment for $1,900. During year 2011, the band performs 40 concerts.

Compute the year 2011 depreciation using the straight-line method

On January 2, 2011, the Crossover Band acquires sound equipment for concert performances at a cost of $55,900. The band estimates it will use this equipment for four years, during which time it anticipates performing about 120 concerts. It estimates that after four years it can sell the equipment for $1,900. During year 2011, the band performs 40 concerts.

Explanation / Answer

If we use Straight line method,

Depreciation =(Cost- Salvage)/Life

= (55900-1900)/4

= $13,500

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