Question

On January 1, a machine with a useful life of 4 years and a salvage value of $20000 was purchased for $84000. What is the depreciation expense for year 2 under straight-line depreciation

Answer 1

Answer:

Annual depreciation (2nd year)= $16,000

Explanation:

Giving the following information:

Purchase price= $84,000

Salvage value= $20,000

Useful life= 4 years

To calculate the annual depreciation, we need to use the following formula:

Annual depreciation= (Purchase price - salvage value)/estimated life (years)

Annual depreciation= (84,000 - 20,000) / 4

Annual depreciation= $16,000