Refer to the information above. Assume that in its financial statements, Tilton Products uses straight-line depreciation and the half-year convention. Depreciation expense recognized on this machinery in 2009 and 2010 will be:
A) $7,500 in 2009 and $11,000 in 2010.
B) $6,000 in 2009 and $12,000 in 2010.
C) $5,000 in 2009 and $10,000 in 2010.
D) $5,500 in 2009 and $11,000 in 2010.

Question

Quizplus · Accepted Answer

Using the half-year convention assumes that machinery is placed into service at the midpoint of the year. Therefore, in 2009, only half a year of depreciation is recognized.

The depreciation expense for the machinery would be:

($30,000 - $1,000) / 5 years = $5,800 per year

For 2009: $5,800 / 2 = $2,900

For 2010: $5,800

Total depreciation expense for the machinery in 2009 and 2010: $2,900 + $5,800 = $8,700

Therefore, the answer is C, which is $5,000 in 2009 and $10,000 in 2010.

Refer to the Information Above