Question

A company purchased a machine for $193,000 on October 1, 2021. The estimated service life is 10 years with a $19,800 residual value. The company records partial-year depreciation based on the number of months in service. Depreciation expense for the year ended December 31, 2021, using straight-line depreciation, is: (Do not round your intermediate calculations. Round your answer to the nearest dollar amount)

Answer 1

$4,330

Step-by-step explanation:

the amount that needs to be depreciated = purchase price - residual value = $193,000 - $19,800 = $173,200

depreciation per year using straight line method = $173,200 / 10 = $17,320

depreciation per month = $17,320 / 12 = $1,443.33 per month

we must record 3 months of depreciation expense = 3 months x $1,443.33 per month = $4,330

December 31, 2021

Dr Depreciation expense 4,330

Cr Accumulated depreciation - machinery 4,330