A company purchased factory equipment on May 1, 2022 for $30,000.It is estimated that the equipment will have a $4,200 residual value at the end of its 8-year useful life.Using straight-line depreciation, the depreciation expense for the years ended December 31, 2022 and 2023 is
A)$2,500 in 2022 and $3,750 in 2023.
B)$3,225 in 2022 and $3,225 in 2023.
C)$2,150 in 2022 and $3,225 in 2023.
D)none of the above

Question

Quizplus · Accepted Answer

The total depreciation over 8 years is $30,000 - $4,200 = $25,800. Annually, this is $25,800 / 8 = $3,225. For 2022, only 8 months (May-Dec) count, so the depreciation is $3,225 * (8/12) = $2,150. For 2023, a full year's depreciation is $3,225.

A Company Purchased Factory Equipment on May 1, 2022 for $30,000.It