Bricker Enterprises purchased a machine for $100,000 on October 1, 2018. The estimated service life is ten years with a $10,000 residual value. Bricker records partial-year depreciation based on the number of months in service.
Depreciation expense for the year ended December 31, 2018, using straight-line depreciation, is:

a) $1,500. b) $7,500. c) $2,250. d) $2,500.

c) $2,250

Explanation:

The computation of the depreciation expense under straight line method is shown below:

As we know that

= (Original cost - residual value) ÷ (useful life)

= ($100,000 - $10,000) ÷ (10 years)

= ($90,000) ÷ (10 years)  

= $9,000

This $9,000 is for one year depreciation but we have to find out for 3 months i.e from October 1 to December 31

= $9,000 × 3 months ÷ 12 months

= $2,250

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