Working Backward: Depreciation
Polk Corp. purchased new store fixtures for $55,000 on January 31, 2012. Polk depreciates assets using the straight-line method and estimated a salvage value for the machine of $5,000. On its December 31, 2014, balance sheet, Polk reported the following:
Property, plant, and equipment:
Store fixtures $55,000
Less: Accumulated depreciation 15,000 $40,000
Required
1. What is the yearly amount of depreciation expense for the store fixtures?
2. What is the estimated useful life in years for the store fixtures? Explain your answer.