Badger Corporation purchased a machine for $150,000 on January 1, 2010. Badger will depreciate the machine using the straight-line method using a five-year period with no residual value. As a result of an error in its purchasing records, Badger did not recognize any depreciation for the machine in its 2010 financial statements. Badger discovered the problem during the preparation of its 2011 financial statements. What amount should Badger record for depreciation expense on this machine for 2011?
A) $0
B) $30,000
C) $37,500
D) $60,000

Question

Quizplus · Accepted Answer

The machine should be depreciated over five years with no residual value, resulting in an annual depreciation expense of $30,000 ($150,000 / 5 years). Since no depreciation was recorded in 2010, Badger should record the correct annual depreciation expense of $30,000 for 2011.

Badger Corporation Purchased a Machine for $150,000 on January 1