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On April 1, 2014, Cyclone's Backhoe Co. purchases a trencher for $280,000. The machine is expected to last five years and have a salvage value of $40,000.
1. Compute depreciation expense for both 2014 and 2015 assuming the company uses the straight-line method.

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Respuesta :

Answer:

2014 - $ 36,000

2015 - $ 48,000

Explanation:

Depreciation Basis

Cost $ 280,000

Salvage Value $ 40,000

Depreciable Basis  $ 240,000

Useful Life 5 years

Annual depreciation charge = $ 48,000  ( 240,000/5)

Charge for 9 months of 2014 $ 36,000

Charge for full year 2015 $ 48,000

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