Account for depreciable assets. (LO 3)

Charlotte \& Gary Motorcycle Repair Corporation purchased a machine on January 1, 2008, for \(\$ 8,000\) cash. Gary expects to use the machine for 4 years and thinks it will be worthless at the end of the 4 -year period. The company will depreciate the machine in equal annual amounts.

\section*{Required}

a. Show the purchase of the machine and the first year's depreciation in the accounting equation.

b. Show how the machine will be presented in the asset section of the balance sheet at December 31, 2008, and December 31, 2009, after appropriate adjustments.

c. What amount of depreciation expense will be shown on the income statement for the year ended December 31, 2008? What amount will be shown for the year ended December 31, 2009?

d. Calculate the total depreciation expense for all 4 years of the asset's life. What do you notice about the book value of the asset at the end of its useful life?