On January 2 2017 the Matthews Band acquires sound equipment

On January 2, 2017, the Matthews Band acquires sound equipment for concert performances at a cost of $67,400. The band estimates it will use this equipment for five years, during which time it anticipates performing about 200 concerts. It estimates that after five years it can sell the equipment for $2,000. During year 2017, the band performs 45 concerts. Compute the year 2017 depreciation using the straight-line method. Answer is complete but not entirely correct. Straight-Line Depreciation Annual Depreciation Expense Choose Numerator: Choose Denominator: Cost / Estimated useful life (years) expense 67,400 200 14,715

Solution

Straight line depreciation Cost minus Salvage / Estimated Useful Life (years) = Depreciation Expense 65400 / 5 = 13080 (Cost· Salvage)/ Total units of production Calculate 2017 depreciation expense: Depreciation per concert 327 Concerts in 2017 55 Depreciation in 2017 17985