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.

Question

Elaine Hicks

Business

22 September, 01:39

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.

+5

Answers (1)

Know the Answer?

Omari Copeland · Answer 1

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