A company purchased new furniture at a cost of \( \$ 22,000 \) on January 1 . The furniture is estimated to have a useful life of 4 years and a salvage value of \( \$ 2800 \). The company uses the straight-line method of depreciation. How much depreciation expense will be recorded the furniture for the first year ended December 31 ?

To calculate the annual depreciation expense using the straight-line method, you start by determining the depreciable amount, which is the cost minus the salvage value. In this case, the depreciable amount is \( 22,000 - 2,800 = 19,200 \). Next, divide the depreciable amount by the useful life of the asset: \( 19,200 \div 4 = 4,800 \). Thus, the depreciation expense for the first year is \( \$ 4,800 \). Understanding depreciation is not just about crunching numbers; it also impacts your financial statements. Accurate depreciation helps reflect the true profitability of a business and ensures that assets are not overvalued on the balance sheet. In this case, recognizing the \( \$ 4,800 \) expense yearly will align the furniture's value with its actual use, benefiting long-term financial health and investment decisions.