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:

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