kansas enterprises purchased equipment for $80,000 on january 1, 2024. the equipment is expected to have a…

kansas enterprises purchased equipment for $80,000 on january 1, 2024. the equipment is expected to have a ten - year service life, with a residual value of $8,400 at the end of ten years. using the straight - line method, depreciation expense for 2025 and the book value at december 31, 2025, would be multiple choice $8,000 and $54,000, respectively. $7,160 and $65,680, respectively. $8,000 and $55,600, respectively. $7,160 and $57,280, respectively.

kansas enterprises purchased equipment for $80,000 on january 1, 2024. the equipment is expected to have a ten - year service life, with a residual value of $8,400 at the end of ten years. using the straight - line method, depreciation expense for 2025 and the book value at december 31, 2025, would be multiple choice $8,000 and $54,000, respectively. $7,160 and $65,680, respectively. $8,000 and $55,600, respectively. $7,160 and $57,280, respectively.

Answer

Explanation:

Step1: Calculate annual depreciation

Annual depreciation = $\frac{Cost - Residual\ value}{Useful\ life}$. Cost = $80000$, Residual value = $8400$, Useful life = 10 years. So, Annual depreciation = $\frac{80000 - 8400}{10}=\frac{71600}{10}=7160$. The depreciation expense for 2025 is $7160$ as it is the same each year under straight - line method.

Step2: Calculate book value at end of 2025

Book value = Cost - Accumulated depreciation. Accumulated depreciation after 2 years (2024 - 2025) = $7160\times2 = 14320$. Cost = $80000$. So, Book value = $80000-14320 = 65680$.

Answer:

$7160$ and $65680$ respectively.