Popeye Company purchased a machine for $300,000 on January 1, 2012. Popeye depreciates machines of this type by the straight-line method over a five-year period using no salvage value. Due to an error, no depreciation was taken on this machine in 2012. Popeye discovered the error in 2013. What amount should Popeye record as depreciation expense for 2013? The tax rate is 40%.
A)$120,000.
B)$60,000.
C)$36,000.
D)$72,000.

Question

Quizplus · Accepted Answer

The machine should be depreciated over 5 years with no salvage value, so the annual depreciation is $300,000 / 5 = $60,000. Since no depreciation was recorded in 2012, Popeye should record $60,000 as depreciation expense for 2013.

Popeye Company Purchased a Machine for $300,000 on January 1