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26 February, 21:31

In anticipation of Digby Corporation's new product Digle, the company purchased new plant and equipment for $39,690,000. The plant and equipment is expected to be used for 15 years, and has a planned salvage value of $0. Assuming straight-line depreciation, how much will Digle expense in depreciation next year?

A. $1,323,000.

B. $1,984,500.

C. $3,969,000.

D. $2,646,000.

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Answers (1)
  1. 26 February, 22:22
    0
    The answer is D. $2,646,000

    Explanation:

    Straight-line depreciation equals

    Cost of the asset minus salvage value/number of useful or expected years.

    Cost of the asset (new plant and property) is $39,690,000

    Salvage value is $0

    Number of years is 15years

    Therefore, Digle expense in depreciation next year will be:

    $39,690,000 - 0/15years

    = $2,646,000
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