Question

On September 16, 2019, a computer was purchased with a 2-year useful life for $3,000, and a salvage value of $300.

Knowing that the depreciation expense for 2020 is $1,350, the amount of depreciation expense for 2019 and 2021 under the nearest full month policy, using the straight-line method is

Select one:

a. 2019 $675 and 2020 $675

b. 2019 $338 and 2020 $1,012

c. 2019 $394 and 2020 $956

d. 2019 $450 and 2020 $900

Answer 1

Ans - 2019 -$450 and 2021 -$900 (The options have got second year 2020, when infact question is asking for 2021 along with year 2019. Depreciation for 2020 being $1350 is already mentioned in the question)

Since machine was purchased on september 16, then it means it was held for 15 days minimum, so depreciation of the month of acquisition will be calculated as well as per nearest full month policy)
So, Depreciation expense for 2019 = [(Cost - Salvage value) / useful life] X (4 months / 12 months)
=> [($3000 - $300) / 2 years] X (4 / 12 months)
=> $450 (Ans)

So, Depreciation expense for 2021 = [(Cost - Salvage value) / useful life] X (8 months / 12 months)
=> [($3000 - $300) / 2 years] X (8 / 12 months)
=> $900 (Ans)

(If there are any issues or questions, kindly let me know in comments. if the solution is to your satisfaction, a thumbs up would be appreciated. Thank you)