Bricker Enterprises purchased a machine for $100,000 on October 1, 2012. The estimated service life is ten years with a $10,000 residual value. Bricker records partial-year depreciation based on the number of months in service. Depreciation expense for 2012, using straight-line, is:

Depreciation expense for 2012, using straight-line, is $2,250.

Explanation:

Depreciation : The depreciation denotes a decreasing value of an asset. The depreciation is charged for one time in a particular year and it continues till its useful life. Due to passage of time, tear and wear, Obsolescence, the asset value diminishing.

There are various methods to compute depreciation of a long term asset. Such as - Straight Line Method, Written Down value method, Double declining method, Units of production method, etc.

Depreciation formula under SLM method

= (Purchase price of machine - Residual value) : Useful life

Since, in the question the machine is purchased on October 1. So, from October 1 to December 31, there are 3 months. So we calculate the depreciation amount for 3 months.

Assume, the books of accounts is closed in December 31.

Thus,

Depreciation amount = ($100,000 - $10,000) : 10 years

= $9,000

Partly year depreciation for 3 months = $9,000 * 3 : 12

= $2,250

Therefore, Depreciation expense for 2012, using straight-line, is $2,250.