Popeye Company purchased a machine for $300,000 on January 1, 2008. Popeye depreciates machines of this type by the straight-line method over a five-year period using no salvage value. Due to an error, no depreciation was taken on this machine in 2008. Popeye discovered the error in 2009. What amount should Popeye record as depreciation expense for 2009? The tax rate is 40%.

Question

Quizplus · Accepted Answer

The correct depreciation expense for 2009 is $60,000, calculated as $300,000 divided by 5 years. The error from 2008 should be corrected as a prior period adjustment, but it does not affect the 2009 depreciation expense calculation.

Popeye Company Purchased a Machine for $300,000 on January 1