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22 October, 07:03

Avalon Industries buys equipment for $50,000, expects to use it for Five years, and then sell it for $6,200. Using the straight-line method, the company should report annual depreciation for the equipment of:

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  1. 22 October, 07:31
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    Annual depreciation = $8,760

    Explanation:

    Giving the following information:

    Avalon Industries buys equipment for $50,000, expects to use it for Five years, and then sell it for $6,200.

    We need to use the following formula:

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

    Annual depreciation = (50,000 - 6,200) / 5 = $8,760
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