Question

burke company bought a machine on january 1, 2022. the machine cost $180,000 and had an expected salvage value of $30,000. the life of the machine was estimated to be 5 years. the depreciable cost of the machine is

Answer 1

The depreciation cost of the machine is $30000.

Define depreciable cost.

The depreciated cost of a fixed asset is its value less the total accumulated depreciation that has been recorded against it. Once an asset has reached the end of its useful life, its value is determined by its depreciated cost. An asset's depreciable cost is the price that can be subtracted from it over time. The purchase price of the item less the anticipated salvage value at the end of its useful life is the asset's value.

The machine cost: $180,000

Expected salvage value: $30,000.

The expected life of the machine: 5 years.

The Annual Depreciation of the machine:

= (Cost - Salvage Value) ÷ Life in Years

= (180,000 - 30,000) ÷ 5

= 150,000 ÷ 5

= $30,000

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