The Baldwin Company has just purchased $40,900,000 of plant and equipment that has an estimated useful life of 15 years. The expected salvage value at the end of 15 years is $4,090,000. What will the depreciation expense for this purchase (exclude all other plant and equipment) be for the second year of use? (Use FASB GAAP)

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abiolataiwo2015 abiolataiwo2015 · Answer 1 · 2021-12-17T10:38:54+01:00

The depreciation expense for this purchase for the second year of use is $2454000.

Using this formula

Depreciation expense= (Original purchase cost – Salvage value) / Estimated useful life

Where:

Original purchase cost=$40900000

Salvage value=$4090000

Estimated useful life=15 years

Let plug in the formula

Depreciation expense=($40900000 – $4090000) / 15

Depreciation expense=$36810000 / 15

Depreciation expense= $2454000

Inconclusion the depreciation expense for this purchase for the second year of use is $2454000.

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