Tankersley Enterprises purchased a piece of machinery for $35,000 in early January 2007. The machinery’s estimated useful life is five years, and it will have no value at the end of its useful life.
Required:
(a) Using the straight-line depreciation method discussed in this chapter, compute the annual depreciation expense on this asset.
(b) At the end of 2009, what amount of accumulated depreciation will be shown for this machine on the balance sheet?
(c) What accounting principle or principles require companies to depreciate long term assets over their useful lives instead of expensing their total cost in the year of purchase?