On October 1, 2014, Marshwinds Wind Turbine Company places a new asset into service. The cost of the asset is $8,000 with an estimated 5-year life and $2,000 residual value at the end of its useful life.
-What is the depreciation expense for 2014 if Marshwinds Wind Turbine Company uses the straight-line method of depreciation?
A) $300
B) $1,600
C) $400
D) $800

Question

Quizplus · Accepted Answer

The straight-line method of depreciation allocates the cost of an asset evenly over its useful life. The depreciation expense for 2014 is calculated as follows:Depreciation expense = (Cost of asset - Residual value) / Useful life= ($8,000 - $2,000) / 5= $6,000 / 5= $1,200

On October 1, 2014, Marshwinds Wind Turbine Company Places a New