Togo’s Sandwiches acquired equipment on April 1, 2021, for $17,500. The company estimates a residual value of $1,900 and a five-year service life.
Required:
Calculate depreciation expense using the straight-line method for 2021 and 2022, assuming a December 31 year-end.

$2,340 and $3,120

Explanation:

The computation of the depreciation expense using the straight line method is shown below:

= (Original cost - residual value) ÷ (useful life)

= ($17,500 - $1,900) ÷ (5 years)

= ($15,600) ÷ (5 years)  

= $3,120

For year 2021, the depreciation is to be charged for 9 months i.e from April 1 to December 31

= $3,120 × 9 months ÷ 12 months

= $2,340

And, for the year 2022, it is same i.e $3,120

In this method, the depreciation is same for all the remaining useful life