Red Corp Constructed a Machine at a Total Cost of $70

question 112

Multiple Choice

Red Corp. constructed a machine at a total cost of $70 million. Construction was completed at the end of 2009 and the machine was placed in service at the beginning of 2010. The machine was being depreciated over a 10-year life using the straight-line method. The residual value is expected to be $4 million. At the beginning of 2013, Red decided to change to the sum-of-the-years'-digits method. Ignoring income taxes, what will be Red's depreciation expense for 2013?

• A)$4.8 million.
• B)$5.4 million.
• C)$6.6 million.
• D)$11.55 million.

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