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ADE Company purchased equipment on January 1, Year 1 for $325,000. The equipment is estimated to have a 4-year useful life and a $75,000 salvage value. How much depreciation expense should Joseph recognize in Year 1 related to the use of the equipment

Sagot :

The depreciation expense to be recognized by Joseph in year 1 is $62,500.

What is depreciation?

Depreciation is the gradual fall in the value of a fixed asset over its economic life. It doesn't apply to intangible assets.

Given values:

The purchase cost of equipment: $325,000

Residual value: $75,000

Number of years of useful life: 4

Computation of depreciation expense for the year 1:

[tex]\rm\ Depreciation \rm\ expense=\frac{\rm\ Purchase \rm\ cost - \rm\ Residual \rm\ value}{\rm\ Useful \rm\ life} \\\\rm\ Depreciation \rm\ expense=\frac{\$325,000-\$75,000}{4} \\\rm\ Depreciation \rm\ expense=\$62,500[/tex]

Therefore, the amount of depreciation charge comes out to be $62,500 to be reported in year 1.

Learn more about the depreciation charge in the related link:

https://brainly.com/question/13127865

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