A company purchased new computers at a cost of $14,000 on September 30. The computers are estimated to have a useful life of 4 years and a residual value of $2,000. The company uses the straight-line method of depreciation. How much depreciation expense will be recorded for the computers for the first year ended December 31?
A) $250
B) $750
C) $875
D) $1,000
E) $3,000

Question

Quizplus · Accepted Answer

The annual depreciation expense is calculated as (Cost - Residual Value) / Useful Life = ($14,000 - $2,000) / 4 = $3,000. For the first year, only 3 months of depreciation is recorded: $3,000 * (3/12) = $750.

A Company Purchased New Computers at a Cost of $14,000