McCloud Company purchased a machine for $15,500.The machine is expected to last four years and has a residual value of $1,500.The entry to record depreciation expense at the end of the first year using the straight-line method is:

Question

Quizplus · Accepted Answer

To calculate straight-line depreciation expense for the first year, we need to subtract the residual value of $1,500 from the purchase price of $15,500 to get a depreciable base of $14,000. Then, we divide this depreciable base by the expected useful life of 4 years to get an annual depreciation expense of $3,500. The journal entry to record depreciation expense would be:
Depreciation Expense $3,500
Accumulated Depreciation $3,500

McCloud Company Purchased a Machine for $15,500