Question

Lucky started a new business last year. Since it was the first year of operation, the business purchased $10,000 in machinery and used the straight-line method for deprecation. Business is booming, so lucky purchased $15000 in equipment during the current year to help meet production demands. Which of the following statements is true regarding the depreciation choices available to lucky.
a. The new machinery can be depreciated using the same method or different method than the previously purchased machinery
b. IF lucky wants to use a different depreciation method, he must recapture depreciation and change the method used on the prior purchase of machinery
c. The new machinery must be depreciated using the same method as the previously purchased machinery

Answer 1

Answer:The new machinery must be depreciated using the same method as the previously purchased Machinery.

Explanation:

This is in line with the consistent concept which states a company must be consistent in the application of accounting principles to his activities.