Victory Company purchases office equipment at the beginning of the year at a cost of $15,000.The machine is depreciated using the straight-line method.The machine's useful life is estimated to be 7 years with a $1,000 salvage value.The journal entry to record the first year's depreciation is:

Question

Quizplus · Accepted Answer

The straight-line method of depreciation allocates equal amounts of depreciation expense to each year of an asset's useful life. To calculate the annual depreciation expense, subtract the salvage value from the cost of the asset, and divide the result by the useful life of the asset. In this case, the annual depreciation expense is ($15,000 - $1,000) / 7 = $2,000.

Therefore, the journal entry to record the first year's depreciation would be:
Debit Depreciation Expense $2,000,
Credit Accumulated Depreciation $2,000.

Option E correctly records the first year's depreciation expense for the office equipment using the straight-line method.

Victory Company Purchases Office Equipment at the Beginning of the Year