Answer:
Depreciation expense in 2019 is $144,050
Explanation:
O’Dell Vegetables uses the straight-line method of depreciation, Depreciation Expense each year is calculated by following formula:
Depreciation Expense = (Cost of machine − Salvage Value )/Useful Life
From July 1, 2016 to 2018:
Annual Depreciation Expense = ($984,000 - $140,000)/8 = $105,500
Depreciation Expense in 2016 = $105,500x6/12 = $52,750
Accumulated Depreciation (end 2018) = $52,750 + $105,500 + $105,500 = $263,750
From 2019, the machine would become uneconomical after December 31, 2023:
Salvage Value = 0 and Remaining useful life = 5 year
Depreciation Expense = (Historical Cost - Accumulated Depreciation - Salvage Value)
/
Remaining Useful Life = ($984,000-$263,750-0)/5 = $144,050
Depreciation in 2019 is $144,050
