Question

On April 30, 2009. Tilton Products purchased machinery for $55.000 The useful life of this machinery is estimated at 8 years, with an $15,000 residual value. value: 3.00 points Refer to the information above. Assume that in its financial statements. Tilton Products uses straight-line depreciation and the half-year convention. Depreciation expense recognized on this machinery in 2009 and 2010 will be: 0 O O O $14.062 in 2009 and $6.875 in 2010. $4.375 in 2009 and $8.750 in 2010. $2.500 in 2009 and $5.000 in 2010 $6.875 in 2009 and $3.438 in 2010.

Answer 1

Answer to first question in the list: Option-(c): $2,500 in 2009 and $5,000 in 2010. Reason: Under straight-line method, Annual depreciation expense = Depreciable cost / Useful life of the asset When half-year conversion is used, if an asset is placed in service any time during the first year, half- year's depreciation is calculated for the first year. Remaining half-year's depreciation will be claimed during its final year's of useful life. That is, Capitalized cost Less: Residual value Depreciable cost Useful life of the asset, years Annual depreciation expense $55,000 $15,000 $40,000 $5,000 ($40000 / 8 years] Therefore, $5000 / 2 = $2500 will be claimed in first year and $5000 in second year onwards.