On April 2, 2005, Empress, Inc. acquired a new price of filtering equipment. The cost of the equipment was $110,000 with a residual value of $20,000 at the end of its estimated useful lifetime of 6 years.
6. Refer to the above information. Assume that in its financial statements, Empress uses straight-line depreciation and rounds depreciation for fractional years to the nearest whole month. Depreciation recognized on this equipment in 2005 and 2006 will be:
a. $12,500 in 2005, and $16,667 in 2006.
b. $4,160 in 2005, and $16,667 in 2006.
c. $3,750 in 2005, and $15,000 in 2006.
d. $11,250 in 2005 and $15,000 in 2006.
7. Refer to the above information. Assume that in its financial statements, Empress uses straight-line depreciation and the half-year convention. Depreciation recognized on this equipment in 2005 and 2006 will be:
a. $4,167 in 2005 and $16,667 in 2006.
b. $8,333 in 2005 and $16,667 in 2006.
c. $7,500 in 2005 and $15,000 in 2006.
d. $3,750 in 2005 and $15,000 in 2006.
