Answer:
b. $34,500
Explanation:
For computing the depreciation expense for 2011, first we have to do the following calculations which are shown below:
Depreciation expense under Straight-line method would be
= (Purchase value of machinery - residual value) ÷ (estimated useful life)
= ($440,000 - $40,000) ÷ (10 years)
= $400,000 ÷ 10 years
= $40,000
From January 2, 2005 to the beginning of 2011, it have 6 years so the accumulated depreciation would be
= $40,000 × 6 years
= $240,000
And, the book value would be
= Purchase value of machinery - accumulated depreciation
= $440,000 - $240,000
= $200,000
Now the depreciation expense for 2011 would be
= (Book value + spent amount - salvage value) ÷ (remaining life)
= ($200,000 + $96,000 - $20,000) ÷ (8 years)
= $276,000 ÷ 8 years
= $34,500
Total years is 14 and the accumulated depreciation year is 6 years so , the remaining year would be 8 years
