Question

On January​ 1, 2018,​ Jordan, Inc. acquired a machine for $1,060,000. The estimated useful life of the asset is five years. Residual value at the end of five years is estimated to be $60,000.

Calculate the depreciation expense per year using the straightminus−line method.

Answer 1

Solution:

Depreciation Expense [Straight Line Method] = (Initial Value - Residual Value) / Useful Life of the asset.

Depreciation Expense = ($ 1,060,000 - $ 60,000 ) / 5 Years = $ 200,000.

Straight-Line Method
Year	Depreciation Expense
2018	$                          200,000
2019	$                          200,000
2020	$                          200,000
2021	$                          200,000
2022	$                          200,000
Total	$                       1,000,000