On 2 April 2013, Victor, Inc. acquired a new piece of filtering equipment. The cost of the equipment was $160,000 with a residual value of $20,000 at the end of its estimated useful lifetime of 4 years.
-Refer to the above information. Assume that in its financial statements, Victor uses straight-line depreciation and the half-year convention. Depreciation recognized on this equipment in 2013 and 2014 will be:

Question

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Using straight-line depreciation with a half-year convention, the annual depreciation is ($160,000 - $20,000) / 4 = $35,000. In 2013, only half a year of depreciation is recognized, so $35,000 / 2 = $17,500. In 2014, a full year's depreciation of $35,000 is recognized.