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Thornton Industries purchased a machine part-way through the year on July 1 for $45,000 and is depreciating

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Thornton Industries purchased a machine part-way through the year on July 1 for $45,000 and is depreciating it with the straight-line method over a life of 10 years, using a residual value of $3,000. Depreciation Expense for the machine for that year ended December 31 is

a. $2,100

b. $2,250

c. $4,200  

d. $4,500

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Cost of machine 45000 Useful life 10 years Re...View the full answer


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Hamza Amjad
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In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue

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