Lundholm Company purchased a machine for $100,000 on January 1, 2016. Lundholm depreciates machines of this type by the straight-line method over a 10-year period using no salvage value. Due to a change in sales patterns, on January 1, 2018, management determines the useful life of the machine to be a total of five years. What amount should Lundholm record for depreciation expense for 2018? The tax rate is 40%.
A) $20,000.
B) $16,000.
C) $17,778.
D) $26,667.

Question

Quizplus · Accepted Answer

2016, 2017: $100,000 ÷ 10 = $10,000
2018: [$100,000 - ($10,000 × 2)] ÷ 3 = $26,667

Lundholm Company Purchased a Machine for $100,000 on January 1