J.B.Enterprises 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.J.B.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?

Question

Quizplus · Accepted Answer

The depreciation expense for the machine can be calculated as follows:
Cost of machine + Shipping + Integration - Salvage value / Useful life
= ($85,000 + $8,000 + $7,000 - $0) / 8 years
= $100,000 / 8 years
= $12,500 per year

Therefore, the correct answer is B) $12,500.

JBEnterprises Purchased a New Molding Machine for $85,000