On April 10, 2017, Tiger Corp.purchased machinery for $240,000.Residual value was estimated at $10,000.The machinery will be depreciated over ten years using the straight-line method.If depreciation is calculated on the basis of the nearest full month, the related Accumulated Depreciation account at December 31, 2018 will be

Question

Quizplus · Accepted Answer

The annual depreciation expense can be calculated as follows:

($240,000 - $10,000) / 10 years = $23,000 per year

To calculate the depreciation expense for 2018, we need to consider the nearest full month. Since the machinery was purchased on April 10, we can assume it was put into service on May 1, 2017 (the beginning of the first full month).

Thus, the depreciation expense for 2017 (May 1 - December 31) would be: 
($23,000 / 12) x 8 = $15,333.33

The depreciation expense for 2018 would be: 
$23,000

Therefore, the total accumulated depreciation at December 31, 2018 would be:
$15,333.33 + $23,000 = $40,333.33

Rounding this amount to the nearest dollar gives us choice B, $40,250.