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24 July, 13:23

Munson Company switched from the sum-of-the-years-digits depreciation method to straight-line depreciation in 2022. The change affects machinery purchased at the beginning of 2020 at a cost of $82,500. The machinery has an estimated life of five years and an estimated residual value of $4,125. What is Munson's 2022 depreciation expense?

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  1. 24 July, 17:03
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    Annual depreciation = $15,675

    Explanation:

    Giving the following information:

    The change affects machinery purchased at the beginning of 2020 for $82,500. The machinery has an estimated life of five years and an estimated residual value of $4,125.

    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)

    Annual depreciation = (82,500 - 4,125) / 5

    Annual depreciation = $15,675

    The depreciation expense is constant through the useful life.
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