A company bought a machine for $16,000. It is expected to be used for 5 years...
A company bought a machine for $16,000. It is expected to be used for 5 years then have a salvage value of $1,000. What is the annual amount of depreciation if the straight-line method is used?
a. $3,200
b. $3,750
c. $3,000
Homework Answers
Answer is c. $3,000
Workings:
Purchase price of machine = $16000
Useful life of machine = 5 years
Salvage value = $1000
Depreciation as per straight line method = (Purchase price of machine - Purchase price of machine)/Useful life of machine
= ($16000 - $1000) / 5 = $3000
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