On April 1, 2014, Cyclone's Backhoe Co. purchases a trencher for $360,000

On April 1, 2014, Cyclone's Backhoe Co. purchases a trencher for $360,000. The machine is expected to last six years and have a salvage value of $36,000.

Compute depreciation expense for both years ending December 2014 and 2015 assuming the company uses the straight-line method.

Explanation:

Straight-line depreciation for 2014

[($360,000 – $36,000) / 6 years] × 9 / 12 = $40,500

Straight-line depreciation for 2015

($360,000 – $36,000) / 6 years = $54,000