Answer:
The correct answer is D.
Explanation:
Giving the following information:
The company purchased factory equipment on June 1, 2013, for $80,000. It is estimated that the equipment will have a $5,000 salvage value at the end of its 10-year useful life.
Under the straight-line method of depreciation, we need to use the following formula to calculate the annual depreciation:
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (80,000 - 5,000)/10= 7,500
Now, we need to calculate the depreciation for 7 months:
Depreciation expense 2013= (7,500/12)*7= $4,375
