On January 1, 2010, Danville Corporation acquired a machine at a cost of $60, 000.The machine's service life was estimated to be ten years and its residual value to be $6, 000.The straight-line method was used for depreciation.On January 1, 2015, the machine's remaining service life was estimated at eight years and its residual value at $3, 000.For 2015, in regard to this machine, Danville should record depreciation of

Question

Quizplus · Accepted Answer

The depreciable cost of the machine is its cost minus its residual value, which is $60,000 - $6,000 = $54,000. The remaining depreciable cost in 2015 is $54,000 - (5 years / 10 years) x $54,000 = $27,000.
The depreciation expense for 2015 is the remaining depreciable cost divided by the remaining service life, which is $27,000 / 8 years = $3,375 per year.
Therefore, the correct answer is B) $3,750, which is the depreciation expense for the entire year of 2015.

On January 1, 2010, Danville Corporation Acquired a Machine at a Cost