A company's annual accounting period ends on December 31.During the current year,a depreciable asset that cost $24,000 was purchased on October 1.The asset has a $1,000 estimated salvage value.The company uses straight-line depreciation and expects the asset to have a six-year life.What is the total depreciation expense for the current year?

Question

Quizplus · Accepted Answer

The annual depreciation expense is calculated as (Cost - Salvage Value) / Useful Life = ($24,000 - $1,000) / 6 = $3,833.33. Since the asset was purchased on October 1, only 3 months of depreciation are recorded for the current year: $3,833.33 * (3/12) = $958.33.

A Company's Annual Accounting Period Ends on December 31