Question

An asset having a four-year service life and a salvage value of $6,000 was acquired for $50,000 cash on April 5. Using straight-line depreciation, what will be the depreciation expense at the end of the first year, December 31?

Answer 1

Answer:

the depreciation expense at the end of the first year, December 31 is $ 8,250

Explanation:

Straight line Method of Depreciation Charges the same amount of depreciation over the useful life of the asset.

Depreciation Charge = (Cost - Salvage Value) / Useful Life

Depreciation Charge = ($50,000-$6,000) / 4 years

                                   = $11,000

Apportionment of Depreciation Charge

From April 5 to December 13 there are 9 months

Therefore depreciation for the year is apportioned as follows :

Depreciation Charge = 9/12× $11,000

                                   = $ 8,250