Answer:
Depreciation expense for 2012, using straight-line, is $2,250.
Explanation:
Depreciation : The depreciation denotes a decreasing value of an asset. The depreciation is charged for one time in a particular year and it continues till its useful life. Due to passage of time, tear and wear, Obsolescence, the asset value diminishing.
There are various methods to compute depreciation of a long term asset. Such as - Straight Line Method, Written Down value method, Double declining method, Units of production method,etc.
Depreciation formula under SLM method
= (Purchase price of machine - Residual value) ÷ Useful life
Since, in the question the machine is purchased on October 1. So, from October 1 to December 31, there are 3 months. So we calculate the depreciation amount for 3 months.
Assume, the books of accounts is closed in December 31.
Thus,
Depreciation amount = ($100,000 - $10,000) ÷ 10 years
= $9,000
Partly year depreciation for 3 months = $9,000 × 3 ÷ 12
= $2,250
Therefore, Depreciation expense for 2012, using straight-line, is $2,250.
