On May 1 2017 Pinkley Company sells office furniture for $300000 cash. The office furniture originally cost $750000 when purchased on January 1 2010. Depreciation is recorded by the straight-line method over 10 years with a salvage value of $75000. What depreciation expense should be recorded on this asset in 2017?

Question

Quizplus · Accepted Answer

The depreciation expense per year is calculated as (Cost - Salvage Value) / Useful Life = ($750,000 - $75,000) / 10 = $67,500 per year. Since the asset was sold on May 1, 2017, only 4 months of depreciation should be recorded for 2017. Therefore, the depreciation expense for 2017 is $67,500 * (4/12) = $22,500.

On May 1 2017 Pinkley Company Sells Office Furniture for $300000