XYZ Corporation Bought a Machine on January 1, 2011

Multiple Choice

XYZ Corporation bought a machine on January 1, 2011. In purchasing the machine, the company paid $50,000 cash and signed an interest-bearing note for $100,000. The estimated useful life of the machine is five years, after which time the salvage value is expected to be $15,000. Given this information, how much depreciation expense would be recorded for the year ending December 31, 2012, if the company uses the sum-of-the-years'-digits depreciation method?

A) $45,000
B) $40,000
C) $36,000
D) $34,000