contestada

On January 1, 2019, Woodstock, Inc. purchased a machine costing $30,900. Woodstock also paid $1,700 for transportation and installation. The expected useful life of the machine is 5 years and the residual value is $4,600. How much is the annual depreciation expense, assuming use of the straight-line depreciation method

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Answer:

Annual depreciation= $5,600

Explanation:

Giving the following information:

Total Purchase price= 30,900 + 1,700= $32,600

Useful life= 5 years

Residual value= $4,600

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

Annual depreciation= (Total Purchase price - salvage value)/estimated life (years)

Annual depreciation= (32,600 - 4,600) / 5

Annual depreciation= $5,600