On June 1, 2010, Pacific Landscaping bought a lawnmower for $29,000. The lawnmower has an estimated life of four years and a $5,000 salvage value. Pacific Landscaping uses the straight-line method of depreciation. Total depreciation expense for the year ended December 31, 2010, is

Question

Quizplus · Accepted Answer

The annual depreciation expense is calculated as (Cost - Salvage Value) / Useful Life. For the lawnmower, it is ($29,000 - $5,000) / 4 = $6,000 per year. Since it was purchased on June 1, 2010, only 7 months of depreciation is recorded for 2010, which is ($6,000 / 12) * 7 = $3,500.

On June 1, 2010, Pacific Landscaping Bought a Lawnmower for $29,000