On January 1,2018,Busy Beaver,Inc.signed a $315,000,5 year note payable to buy a new industrial veneer cutter.Busy Beaver plans to use the machine for 10 years and then sell it for its scrap value of $5,000.Using straight-line depreciation,depreciation expense for the year ended December 31,2018 equals:
A)$31,000.
B)$31,500.
C)$284,000.
D)$283,500.

Question

Quizplus · Accepted Answer

Depreciation expense = (Cost − Residual value)× (1 ÷ Useful life)
= ($315,000 − $5,000)× (1 ÷ 10)= $31,000