Question

On January 1, a machine with a useful life of four years and a salvage value of $16000 was purchased for $80000. What is the depreciation expense for year 2 under straight-line depreciation?a. $80000.b. $20000. c. $40000. d. $44000.

Answer 1

Answer: Year 2 depreciation= $16,000

Correct answer is not among  the options

Explanation:

Using the straight line depreciation method we have that

Annual Depreciation = Purchase cost - Salvage value/ useful life

=$80000-$16000 / 4

$64,000/ 4

= $16,000

If Annual depreciation= $16,000 , then Deprecation expense for year 2 = $16,000