Adams Bakery uses the modified half month convention to calculate depreciation e

Question

Adams Bakery uses the modified half month convention to calculate depreciation expense in the year an asset is purchased or sold. Adams has a calendar year accounting period and uses the straight-line method to compute depreciation expense. On March 17, 2016, Adams acquired equipment at a cost of $130,000. The equipment has a residual value of $44,000 and an estimated useful life of 6 years. What amount of depreciation expense will be recorded for the year ending December 31, 2016? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.) A) $7,167 B) $14,333 C) $10,750 D) $11,944

Explanation / Answer

Answer is A. $7167 Explanation: Cost of Equipment: $130,000 Salvage value: $44,000 Life: 6 years Depreciable amount: cost-salvage value = 130,000-44,000 = $ 86,000 Annual Depreciation: Depreciable amount/Life: 86000/6 = $14,333 As asset is purchase during the year, half dep is allowed Depreciation= 14333*1/2 = 7167

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.