Reference no: EM133013311

Problem - Mean Beans, a local coffee shop, has the following assets on January 1, 2020. Mean Beans prepares annual financial statements and has a December 31, 2020 year-end. The company's depreciation policy is to use the straight-line method to depreciate its assets.

a. On January 1, 2020, purchase equipment costing $21,200 with an estimated life of five years. Mean Beans will scrap the equipment after five years for $0.

b. On July 1, 2020, purchase furniture (tables and chairs) costing $18,700 with an estimated life of ten years. Mean Beans estimates that it can sell the furniture for $3,400 after ten years.

c. On January 1, 2018, Mean Beans had purchased a car costing $36,250 with an estimated life of eight years. Mean Beans estimates that it can sell the car for $7,250 after eight years.

Required - For each transaction, calculate the current year annual depreciation expense.