Avatar,Inc.bought a machine on January 1,2011 for $96,000.The machine is expected to last for 8 years,after which it will be worthless.How much depreciation expense will Avatar show on its income statement for the year ended December 31,2011?

Question

Quizplus · Accepted Answer

The depreciation expense for the first year can be calculated using the straight-line method:
Depreciation expense = (Cost of the machine - Salvage value) / Useful life
Depreciation expense = ($96,000 - $0) / 8 = $12,000 
Therefore, the correct answer is C) $12,000.