Howell Corporation purchased a new machine costing $27,600 on January 1, 2017. The machine is expected to have a $1,800 salvage value at the end of its useful life of six years. What is the depreciation expense that Howell Corporation records for 2017 using the straight line method?

(A) $1,800

(B) $4,300

(C) $4,900

(D) $4,600

The correct answer is B: $4,300

Explanation:

Giving the following information:

Howell Corporation purchased a new machine costing $27,600 on January 1, 2017. The machine is expected to have a $1,800 salvage value at the end of its useful life of six years.

Depreciation = (purchase value - salvage value) / useful life

Depreciation = (27600 - 1800) / 6 = 4300