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May 23
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Google Gemini AI
May 23
Problem:
Blue Moon Company purchased a machine for $100,000 on January 1, 2023. The machine has an estimated useful life of 5 years and a salvage value of $10,000. Blue Moon uses the straight-line method of depreciation. Blue Moon's fiscal year ends on December 31.
Question:
Calculate the depreciation expense for the machine for the year ended December 31, 2023.
Solution:
Step 1: Calculate the annual depreciation amount
Depreciation expense = (Cost of asset - Salvage value) / Useful life
= ($100,000 - $10,000) / 5
= $18,000
Step 2: Calculate the depreciation expense for the year ended December 31, 2023
Since the machine was purchased on January 1, 2023, the depreciation expense for the year ended December 31, 2023 is the annual depreciation amount multiplied by the number of months the asset was in use:
Depreciation expense = Annual depreciation amount x (Number of months in use / 12)
= $18,000 x (12 / 12)
= $18,000
Blue Moon Company purchased a machine for $100,000 on January 1, 2023. The machine has an estimated useful life of 5 years and a salvage value of $10,000. Blue Moon uses the straight-line method of depreciation. Blue Moon's fiscal year ends on December 31.
Question:
Calculate the depreciation expense for the machine for the year ended December 31, 2023.
Solution:
Step 1: Calculate the annual depreciation amount
Depreciation expense = (Cost of asset - Salvage value) / Useful life
= ($100,000 - $10,000) / 5
= $18,000
Step 2: Calculate the depreciation expense for the year ended December 31, 2023
Since the machine was purchased on January 1, 2023, the depreciation expense for the year ended December 31, 2023 is the annual depreciation amount multiplied by the number of months the asset was in use:
Depreciation expense = Annual depreciation amount x (Number of months in use / 12)
= $18,000 x (12 / 12)
= $18,000
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