Question

On January 1, Noonan Company purchases equipment for $100,000. The equipment is expected to have a useful life of 5 years and will have no value at the end of that period. Noonan allocates the cost equally over the period of use so the depreciation expense that must be recognized for the year is

a)$20,000.
b)$10,000.
c)$0.
d)$100,000.

Answer 1

The depreciation expense that must be recognized for the year is $20,000. Option a is coress

Step-by-step explanation:

The depreciation expense that must be recognized for the year is $20,000 (option a). Depreciation is the method used to allocate the cost of a long-term asset over its useful life.

In this case, the equipment was purchased for $100,000 and is expected to have a useful life of 5 years. Therefore, the annual depreciation expense is calculated by dividing the cost of the equipment by its useful life:

$100,000 / 5 = $20,000

This means that $20,000 should be recognized as depreciation expense for the year.