Question

On January 1, a company purchases a $5,000 computer that has an estimated life of 5 years. On December 31 of the current year, what is total expense recognized by the company as a result of the computer purchase?

a. $0
b. $1,000
c. $5,000
d. $2.000
e. None of the Answers is Correct

Answer 1

The total expense recognized by the company as a result of the computer purchase on December 31 of the current year would be $1,000.

Step-by-step explanation:

The total expense recognized by the company as a result of the computer purchase on December 31 of the current year would be $1,000. This is because the company follows the concept of depreciation to allocate the cost of the computer over its useful life. Since the estimated life of the computer is 5 years, the annual depreciation expense would be $5,000 / 5 = $1,000.