A company purchased factory equipment on June 1, 2014, for $96,000. It is estimated that the equipment will have a $6,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2014, is
A) $9,000.
B) $5,250.
C) $4,500.
D) $3,750.

Question

Quizplus · Accepted Answer

Depreciation expense = (Cost - Salvage value) / Useful life= (96,000 - 6,000) / 10= 90,000 / 10= $9,000 per yearDepreciation expense for 7 months (June 1 to December 31)= 9,000 * 7/12= $5,250

A Company Purchased Factory Equipment on June 1, 2014, for $96,000