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On April 1, Cyclone Company purchases a trencher for $288,000. The machine is expected to last five years and have a salvage value of $44,000.

Exercise 8-11 (Algo) Straight-line, partial-year depreciation LO C2

Compute depreciation expense at December 31 for both the first year and second year assuming the company uses the straight-line method.

To compute the depreciation expense using the straight-line method for both the first and second year, we follow these steps:

### Given:
- **Cost of the machine (Initial Cost):** $288,000
- **Salvage Value:** $44,000
- **Useful Life:** 5 years
- **Date of Purchase:** April 1

### Step 1: Calculate Annual Depreciation

The straight-line depreciation formula is:

\[
\text{Annual Depreciation} = \frac{\text{Cost} - \text{Salvage Value}}{\text{Useful Life}}
\]

Substitute the given values:

\[
\text{Annual Depreciation} = \frac{288,000 - 44,000}{5} = \frac{244,000}{5} = 48,800
\]

The machine depreciates at $48,800 per full year.

### Step 2: Compute Depreciation for the First Year (Partial Year)



On April 1, Cyclone Company purchases a trencher for $288,000. The machine is expected to last five years and have a salvage value of $44,000. Compute depreciation expense at December 31 for both the first year and second year assuming the company uses the straight-line method.

Calculate the straight-line depreciation of a trencher purchased by Cyclone Company for $288,000 with a salvage value of $44,000. This problem covers how to compute both partial and full-year depreciation expenses, including formulas and step-by-step instructions. Suitable for accounting and finance students.

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