On January 1, 2014, Janik Corp. acquired a machine at a cost of $700,000. It is to be depreciated on the straight-line method over a five-year period with no residual value. Because of a bookkeeping error, no depreciation was recognized in Janik's 2014 financial statements. The oversight was discovered during the preparation of Janik's 2015 financial statements. Depreciation expense on this machine for 2015 should be
A) $0.
B) $140,000.
C) $175,000.
D) $280,000.

Question

Quizplus · Accepted Answer

The machine should be depreciated over 5 years, so the annual depreciation is $700,000 / 5 = $140,000. Since no depreciation was recorded in 2014, the 2015 expense should be the normal annual depreciation of $140,000.