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31 December, 08:27

On January 1, 2016, Woodstock, Inc. purchased a machine costing $35,100. Woodstock also paid $1,100 for transportation and installation. The expected useful life of the machine is 5 years and the residual value is $5,200. How much is the annual depreciation expense assuming use of the straight-line depreciation method

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  1. 31 December, 12:13
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    Answer: $6,200

    Explanation:

    machine cost $35,100

    Transport & installation cost $1,100

    Total cost of machine = $36,200

    Useful life is 5 years

    Residual value is $5,200

    Depreciation on a straight line bases is calculated thus:

    = cost. - residual vale / useful life

    = $36,200 - $5,200/5

    = $31,000/5

    = $6,200

    Annual depreciation is $6,200
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