2. A lumber company purchases and installs a wood chipper for $280,000. The chipper is classified as MACRS 7-year property. The chipper's useful life is 15 years. The estimated salvage value at the end of 15 years is $40,000. Using straight-line depreciation, what is the approximate first year depreciation?

Question

Ibrahim Hahn

Business

16 October, 11:55

2. A lumber company purchases and installs a wood chipper for $280,000. The chipper is classified as MACRS 7-year property. The chipper's useful life is 15 years. The estimated salvage value at the end of 15 years is $40,000. Using straight-line depreciation, what is the approximate first year depreciation?

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Answers (1)

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Elvis · Answer 1

Annual depreciation = $16,000

Explanation:

Giving the following information:

A lumber company purchases and installs a wood chipper for $280,000. The chipper's useful life is 15 years. The estimated salvage value at the end of 15 years is $40,000.

Annual depreciation = (original cost - salvage value) / estimated life (years)

Annual depreciation = (280,000 - 40,000) / 15 = $16,000