Trinitron,Inc.purchased a new molding machine for $85,000.The company paid $8,000 for shipping and another $7,000 to get the machine integrated with the company's existing assets.Trinitron must maintain a supply of special lubricating oil just in case the machine breaks down.The company purchased a supply of oil for $4,000.The machine is to be depreciated on a straight-line basis over its expected useful life of 8 years.What will depreciation expense be during the first year?

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Quizplus · Accepted Answer

The depreciation expense is calculated based on the total cost of the asset, which includes the purchase price, shipping, and integration costs. The cost of the oil is not included as it is a supply cost. Total cost = $85,000 + $8,000 + $7,000 = $100,000. Depreciation expense = $100,000 / 8 years = $12,500 per year.