Question

Arlington LLC purchased an automobile for $40,000 on July 5, 2014. What is Arlington's depreciation expense for 2014 if its business use percentage is 75 percent (ignore any possible bonus depreciation)?

A. $2,370
B. $3,160
C. $6,000
D. $8,000
E. None of these

Answer 1

To calculate the depreciation expense for 2014, multiply the total cost of the automobile by the business use percentage and divide by the useful life of the asset. In this case, the depreciation expense for Arlington LLC in 2014 would be $6,000.

Step-by-step explanation:

To calculate the depreciation expense for 2014, we first need to determine the business use cost of the automobile. The business use cost is calculated by multiplying the total cost of the automobile ($40,000) by the business use percentage (75%). So, the business use cost is $30,000 ($40,000 x 0.75).

Next, we need to determine the depreciation expense. Depreciation is the allocation of the cost of an asset over its useful life. Let's assume the automobile has a useful life of 5 years. The depreciation expense can be calculated by dividing the business use cost ($30,000) by the useful life (5 years), which gives us $6,000 per year.

Therefore, Arlington's depreciation expense for 2014 would be $6,000