Question

You install all new hardwood floors in your upscale ski resort. The total cost of the floor installation is $62,000. Instead of realizing the full expense in this fiscal year, you will depreciate the cost over the useful life of the floors. You expect the floors will have a useful life of 12 years, and the scrap value will be $1,000. Using straight line depreciation, how much depreciation should you recognize each year? $4,000$5,083.33$5,166.67$6,200.10​ Question 2 You purchase a new pizza oven for $9,950 which will have a scrap value of $900. Assuming a 35% depreciation rate, how much depreciation would you recognize in year one when using the Double Declining Balance depreciation method? $2,810$3167.50$3482.50$3,572.75​​ Continuing with the pizza oven example... in what year will the pizza oven value fall below scrap value, meaning that will be the end of its useful life? Year 5 Year 6 Year 7 Year 8 Question 4 2.5pts A restaurant can copyright their menu design for a period of 120 years. The value of that copyright will be decreased over that 120 -year period. This decrease in value is called: Depreciation Devaluation Amortization Reduction

Answer 1

To calculate the depreciation expense each year using straight-line depreciation, subtract the scrap value from the total cost of the floor installation and divide it by the useful life of the floors. The correct answer is b) $5,083.33.

To calculate straight-line depreciation, you can use the following formula:

Depreciation per year =Cost - Scrap Value / Useful Life

Given the information:

\text{Cost} = $62,000

\text{Scrap Value} = $1,000

Useful Life = 12 years

Substitute these values into the formula:

Depreciation per year = $62,000 − $1,000 / 12

Depreciation per year = $61,000 / 12

Depreciation per year ≈ $5,083.33

Therefore, the correct answer is:

b) $5,083.33