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What the transaction to record depreciation will affect

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Problem 1: Lomax Enterprise purchased a depreciable asset worth $ 22,000 on March 1 of year 1. The asset will be depreciated using the straight-line system over a useful life of four years. Assuming the salvage value of the asset is $ 2,000, Lomaz Enterprises recognizes the depreciation expense for year 2, in the amount of $ 5,000. The transaction to record depreciation will affect:

1- Only the Balance Sheet

2- Only the Income Statement

3- Both the Balance Sheet and the Income Statement

4- There will be no effect on any of the financial statements since the cash is not part of the transaction

Reference no: EM132934421

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