On July 1, 2012, a machine with a useful life of five years and a residual value of $4,000 was purchased for $20,000. Under straight-line depreciation, what is the depreciation expense for calendar 2013?
A)$4,000
B)$3,556
C)$3,200
D)$1,600

Question

Quizplus · Accepted Answer

Under straight-line depreciation, the annual depreciation expense is calculated by dividing the depreciable cost (cost - residual value) by the useful life of the asset.

Depreciable cost = $20,000 - $4,000 = $16,000
Useful life = 5 years

Therefore, annual depreciation expense = $16,000 / 5 = $3,200

Since we're looking for the depreciation expense for 2013, we only need to consider one full year of depreciation, which is $3,200.

On July 1, 2012, a Machine with a Useful Life