On January 1,2011,Ace Electronics paid $400,000 cash for a computer that would be used to store and process its accounting information.The computer has a 5-year useful life,after which it will be worthless because it will be obsolete.How much depreciation expense should Ace Electronics record for the year ended December 31,2013,using the straight-line method?

Question

Quizplus · Accepted Answer

To calculate depreciation using the straight-line method, we need to divide the cost of the asset by its useful life.

$400,000/5 years = $80,000 per year

Since we are calculating depreciation expense for the year ended December 31, 2013, we need to determine how many years have passed since the purchase of the asset.

January 1, 2011 to December 31, 2011 = 1 year 
January 1, 2012 to December 31, 2012 = 2 years 
January 1, 2013 to December 31, 2013 = 3 years

Therefore, depreciation expense for the year ended December 31, 2013 is:

3 years x $80,000 per year = $240,000

However, we are only asked for the depreciation expense for the year 2013. So, the correct answer is:

Choice C) $80,000 (depreciation expense for the year ended December 31, 2013)

On January 1,2011,Ace Electronics Paid $400,000 Cash for a Computer