Question

Avalon Industries buys equipment for $64,000, expects to use it for four years, and then sell it for $6,400. Using the straight-line method, the company should report annual depreciation for the equipment of:

Answer 1

Answer: $14400

Explanation:

The annual depreciation will be calculated as:

= (Cost-Salvage value)/Useful Life

where,

Cost = $64000

Salvage value = $6400

Useful life = 4

= (Cost-Salvage value)/Useful Life.

= ($64000 - $6400)/4

= $57600/4

= $14400

The annual depreciation is $14400