Question

On September 30, 2018, Bricker Enterprises purchased a machine for $200,000. The estimated service life is 10 years with a $20,000 residual value. Bricker records partial-year depreciation based on the number of months in service.

Depreciation for 2018, using the straight-line method is:
A)$13,500.
B)$15,000.
C)$4,500.
D)$5,000.

Answer 1

The depreciation for 2018 using the straight-line method is $4,500.

Step-by-step explanation:

To calculate the depreciation for 2018 using the straight-line method, you first need to determine the annual depreciation expense. The formula to calculate the annual depreciation expense is: (Cost of Asset - Residual Value) / Service Life. In this case, the cost of the asset is $200,000, the residual value is $20,000, and the service life is 10 years. Plugging in these values into the formula, you get ($200,000 - $20,000) / 10 = $18,000.

Since Bricker records partial-year depreciation based on the number of months in service, you need to find the number of months the machine was in service in 2018. Since the machine was purchased on September 30, 2018, it was in service for 3 months (October, November, December).

To calculate the depreciation for 2018, you need to multiply the monthly depreciation expense ($18,000 / 12 = $1,500) by the number of months in service. $1,500 x 3 = $4,500. Therefore, the depreciation for 2018 using the straight-line method is $4,500.

Answer 2

On September 30, 2018, Bricker Enterprises purchased a machine for $200,000. The estimated service life is 10 years with a $20,000 residual value. Bricker records partial-year depreciation based on the number of months in service. Depreciation for 2018, using the straight-line method is: $4,500. so the correct option is C)$4,500.

Step-by-step explanation:

To calculate the depreciation for 2018 using the straight-line method, you first need to determine the annual depreciation expense. The formula to calculate the annual depreciation expense is: (Cost of Asset - Residual Value) / Service Life. so the correct option is C)$4,500.

In this case, the cost of the asset is $200,000, the residual value is $20,000, and the service life is 10 years. Plugging in these values into the formula, you get ($200,000 - $20,000) / 10 = $18,000.

Since Bricker records partial-year depreciation based on the number of months in service, you need to find the number of months the machine was in service in 2018. Since the machine was purchased on September 30, 2018, it was in service for 3 months (October, November, December).

To calculate the depreciation for 2018, you need to multiply the monthly depreciation expense ($18,000 / 12 = $1,500) by the number of months in service. $1,500 x 3 = $4,500. Therefore, the depreciation for 2018 using the straight-line method is $4,500.