Acme paid $100,000 for a machine with a $5,000 salvage value and an estimated life of 190,000 hours.
Acme reports on a calendar year basis and used the machine for 1,700 hours during the first year it owned the asset.Which of the following statements accurately compare the first year depreciation expense if the asset had been purchased on January 1 of the current year versus a March 1 acquisition date.
A)Depreciation Expense if acquired January 1 is $850 and if acquired March 1 is $708.
B)Depreciation Expense if acquired January 1 is $850 and if acquired March 1 is $637.
C)In both cases,the Depreciation Expense is $850.
D)Depreciation Expense if acquired January 1 is $895 and if acquired March 1 is $746.

Question

Quizplus · Accepted Answer

The depreciation expense is calculated based on usage (hours), not the date of acquisition. Therefore, the expense remains the same regardless of whether the machine was acquired on January 1 or March 1.

Acme Paid $100,000 for a Machine with a $5,000 Salvage