On April 30, 2017, Tilton Products purchased machinery for $88,000. The useful life of this machinery is estimated at 8 years, with an $8,000 residual value. Assume that in its financial statements, Tilton Products uses straight-line depreciation and rounds depreciation for fractional years to the nearest month. Depreciation expense recognized on this machinery in 2017 and 2018 will be:

The Depreciation expense recognized on this machinery in 2017 and 2018 will be: $6,667 ;$10,000.

Tilton Products Depreciation expense

2017 Depreciation expense=[($88,000 − $8,000)/8 ]×8/12

2017 Depreciation expense=($80,000/8)×8/12

2017 Depreciation expense= $10,000×8/12

2017 Depreciation expense= $6,667

2018 Depreciation expense=[($88,000 − $8,000)/8 ]

2018 Depreciation expense=($80,000/8)

2018 Depreciation expense= $10,000

Inconclusion the depreciation expense recognized on this machinery in 2017 and 2018 will be:$6,667 ; $10,000.

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$6,666.67 and $10,000

Explanation:

The computation of the depreciation expense for the year 2017 and 2018 is shown below:

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

= ($88,000 - $8,000) ÷ (8 years)  

= ($80,000) ÷ (8 years)  

= $10,000

Since the machinery is purchased on April 30 and we assume the books are closed on December 31 so the number of months calculated is 8 months

Therefore for the year 2017 the depreciation expense is

= $10,000 × 8 months ÷ 12 months

= $6,666.67

And, for the year 2018 the depreciation expense is same i.e $10,000

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