Question

Practice Question 24 At the beginning of the year, Powers Company purchased a piece of machinery for $50,000. It has a salvage value of $5,000, an estimated useful life of 9 years, and estimated units of output of 90,000 units. Actual units produced during the first year were 11,000. How much is depreciation expense for the first year under the straight-line method?

Answer 1

$5,000

Step-by-step explanation:

The computation of the depreciation expense under the straight-line method is shown below:

Depreciation expense = (Original cost - residual value) ÷ (useful life)

= ($50,000 - $5,000) ÷ (9 years)

= ($45,000) ÷ (9 years)

= $5,000

In this method, the depreciation is same for all the remaining useful life

The units are ignored in this method as it is used when units of production method applies