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22 June, 07:41

Lockard Company purchased machinery on January 1, 2010 for 80,000. The machinery is estimated to have a salvage value of $8,000 after a useful life of 8 years.

A) Compute 2010 depreciation expense using the straight-line method.

B) Compute 2010 depreciation using method assuming the machinery was purchased on September 1,2010

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  1. 22 June, 09:42
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    a. $9,000

    b. $3,000

    Explanation:

    The computation of the depreciation expense is shown below:

    a.

    = (Purchase value of machinery - estimated salvage value) : (useful life)

    = ($80,000 - $8,000) : (8 years)

    = ($72,000) : (8 years)

    = $9,000

    b. The asset is purchased on September 1,2010, so the depreciation expense should be charged for four months i. e From September to December.

    We assume the books are closed on December 31, 2010

    So, the depreciation would be

    = $9,000 * 4 months : 12 months

    = $3,000
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