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On January 1, 2019, Woodstock, Inc. purchased a machine costing $38,000. Woodstock also paid $1,600 for...

On January 1, 2019, Woodstock, Inc. purchased a machine costing $38,000. Woodstock also paid $1,600 for transportation and installation. The expected useful life of the machine is 6 years and the residual value is $4,800.

How much is the annual depreciation expense, assuming use of the straight-line depreciation method?

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Answer #1

Answer: $5,800

Explanation:

Straight line Depreciation = Cost of the machine - residual value / Useful life of the machine

Cost of machine = $38,000 + $1600 = $39,600

Residual value = $4,800

Useful life of machine = 6 years

Straight line Depreciation = ($39,600 - $4,800) / 6 years = $5,800 per annum (Answer)

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