Threefold Timepieces, Inc. is leasing a space in the mall in which to build its

Question

Threefold Timepieces, Inc. is leasing a space in the mall in which to build its newest repair center. The lease is for two years with a lease payment of $20,000 per month, with the first payment due immediately. It constructs a small repair stand at a cost of $260,000. The small repair stand has an expected useful life of 20 years. Assuming Threefold Timepieces depreciates this type of fixed assets on a straight-line basis, what should depreciation expense for the small repair stand be for the first year?

$13,000.

$26,000.

$130,000.

$260,000.

Explanation / Answer

Straight line dep = (original cost-salvage value)/useful life

Depreciation expense = (260000/20) = 13000

so answer is a) $13000

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