Ask Question
24 April, 04:41

Minor company installs a machine in its factory at the beginning of the year at a cost of $135,000. the machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. during its first year, the machine produces 64,500 units of product. determine the machines' first year depreciation under the straight-line method.

+3
Answers (1)
  1. 24 April, 04:48
    0
    To determine what the depreciation of an asset using straight line method, the formula to be used is:

    (Initial cost of machine - salvage value) divided by estimated useful life

    So in this problem:

    Initial Cost - $135000

    Salvage Value - $15000

    Estimated Useful Life - 5 years

    Plug that in the formula

    Annual depreciation = ($135000 - $15000) / 5

    = $120000 / 5

    = $24,000

    The first year depreciation for the machine is $24000 because the company bought it in the beginning of the year. (So there is no need to divide this by 12 months)

    To record this:

    Depreciation Expense $24000

    Accumulated Depreciation $24000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Minor company installs a machine in its factory at the beginning of the year at a cost of $135,000. the machine's useful life is estimated ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers