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A copy machine acquired on May 1 with a cost of $2,545 has an estimated useful life of 3 years. Assuming that it will have a residual value of $445, determine the depreciation as on December 31, for the first and second year by the straight-line method. Round your answers to the nearest whole dollar.

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Answer:

Results are below.

Explanation:

Giving the following information:

A copy machine acquired on May 1 with a cost of $2,545 has an estimated useful life of 3 years.

Residual value=  $445

To calculate the depreciation expense under the straight-line method, we need to use the following formula:

Annual depreciation= (original cost - salvage value)/estimated life (years)

First, the annual depreciation:

Annual depreciation= (2,545 - 445) / 3

Annual depreciation= $700

Year 1:

Annual depreciation= (700/12)*8= $466.67

Year 2:

Annual depreciation= $700

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