On January 1,a machine with a useful life of five years and a residual value of $4,500 is purchased for $22,500.What is the depreciation expense in year 3 under straight-line depreciation?
A)$4,500
B)$3,600
C)$10,800
D)$13,500

Question

Quizplus · Accepted Answer

Under straight-line depreciation, the total depreciation expense over the useful life of the asset is calculated by subtracting the residual value from the original cost and then dividing by the useful life.

Total depreciation = (Purchase price - Residual value) / Useful life

Total depreciation = ($22,500 - $4,500) / 5 = $3,600 per year

To find the depreciation expense in year 3, we simply multiply the annual depreciation expense by the number of years that have passed.

Depreciation expense in year 3 = $3,600 x 3 = $10,800

Therefore, the correct answer is B, $3,600.

On January 1,a Machine with a Useful Life of Five