A company purchased an asset for $100,000. The asset is expected to last for 10 years,...
A company purchased an asset for $100,000. The asset is expected to last for 10 years, with no residual value at the end of its useful life. Assume that the company has adopted a partial-year depreciation policy. Half of a year's depreciation is taken in the year of purchase and sale, while a full year’s depreciation is applied to the remaining years. Therefore, the amount of depreciation recorded in the year of purchase is:
Select one:
a. $100,000
b. zero
c. $5,000
d. $10,000
Homework Answers
Correct answer-----------(c) $5000
Working
| Straight line Method | ||
| A | Cost | $ 100,000 |
| B | Residual Value | $ 0 |
| C=A - B | Depreciable base | $ 100,000 |
| D | Life [in years left ] | 10 |
| E=C/D | Annual SLM depreciation | $ 10,000.00 |
| Half year depreciation (10000/2) | $ 5000.00 | |
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