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On January 1, the Matthews Band pays $66,000 for sound equipment. The band estimates it will use this equipment for four years and perform 200 concerts. It estimates that after four years it can sell the equipment for $1,000. During the first year, the band performs 45 concerts. Compute the first-year depreciation using the straight-line method.

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Answer:

Annual depreciation= $16,250

Explanation:

Giving the following information:

On January 1, the Matthews Band pays $66,000 for sound equipment. The band estimates it will use this equipment for four years and perform 200 concerts. It estimates that after four years it can sell the equipment for $1,000.

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (66,000 - 1,000)/4= $16,250

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