Autumn Resorts purchased guest room furniture on January 1, 2015 for $120,000.The furniture has an estimated useful life of ten years.What amount will appear on Autumn's income statement for depreciation expense for the year ending June 30, 2016?

Question

Quizplus · Accepted Answer

Depreciation expense is calculated using the straight-line method, which means dividing the cost ($120,000) by the useful life (10 years) to get an annual depreciation expense of $12,000. Since the question asks for the depreciation expense for the year ending June 30, 2016, it means only six months of depreciation will be recorded in that year. Therefore, the answer is $12,000 divided by two, which is $6,000. The correct choice is D.

Autumn Resorts Purchased Guest Room Furniture on January 1, 2015