Question

A machine is purchased on September 30, 2018, for $60,000. Useful life estimated at four years and no residual value is anticipated. The straight-line depreciation method is used. The company's fiscal year ends on December 31. Depreciation for 2018 should be

1.$6,000
2.$30,000
3.$11,250
4.$3,750

Answer 1

4.$3,750

Step-by-step explanation:

The computation of the depreciation expense using the straight line method is shown below:

= (Original cost - residual value) ÷ (useful life)

= ($60,000 - $0) ÷ (4 years)

= ($60,000) ÷ (4 years)

= $15,000

But we have to compute for 3 months i.e September 30, 2018 to December 31 2018

= $15,000 × 3 months ÷ 12 months

= $3,750