On April 1, 2010, Stone’s Backhoe Co. purchases a trencher for $260,000. The machine is expected to last four years and have a salvage value of $26,000. Compute depreciation expense for both 2010 and 2011 assuming the company uses the straight-line method.

On April 1, 2010, Stone’s Backhoe Co. purchases a trencher for $260,000. The machine is expected to last four years and have a salvage value of $26,000.

 

Compute depreciation expense for both 2010 and 2011 assuming the company uses the straight-line method.

Explanation:

Straight-line depreciation for 2010

[($260,000 – $26,000) / 4 years] × 9/12 = $43,875

  

Straight-line depreciation for 2011

($260,000 – $26,000) / 4 years = $58,500