On January 2, 2016, Karen's Culinary Delights purchased a piece of equipment for $42,000 with a useful life of seven years and a residual value of $6,000. If Karen's used the sum-of-the-years'-digits method with the half-year convention, depreciation expense for 2016 was

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The sum-of-the-years'-digits method involves adding the years of the asset's life (7+6+5+4+3+2+1 = 28). The depreciation for the first full year would be 7/28 of the depreciable base ($42,000 - $6,000 = $36,000), which is $9,000. However, with the half-year convention, only half of the first year's depreciation is taken in the first year, making it $9,000 / 2 = $4,500.

On January 2, 2016, Karen's Culinary Delights Purchased a Piece