A machine costing $49,000 has a life of 10 years. The salvage value is $10,000. It was purchased on February 1. The depreciation expense for the calendar year is: (Do not round any intermediary calculations. Round your final answer to the nearest dollar.)
A)$408.
B)$4,492.
C)$325.
D)$3,575.

Question

Quizplus · Accepted Answer

First, we need to calculate the annual depreciation expense using the straight-line depreciation method:

Annual Depreciation Expense = (Cost of Machine - Salvage Value) / Life of Machine

Annual Depreciation Expense = ($49,000 - $10,000) / 10

Annual Depreciation Expense = $3,900

However, since the machine was purchased on February 1, we need to prorate the depreciation expense for the year. There are 11 months left in the year, so:

Depreciation Expense for the Year = Annual Depreciation Expense x (Months of Use / 12)

Depreciation Expense for the Year = $3,900 x (11/12)

Depreciation Expense for the Year = $3,575

Therefore, the depreciation expense for the calendar year is $3,575. The best choice is D.

A Machine Costing $49,000 Has a Life of 10 Years