Question

Machinery was purchased for $85,000. Freight charges amounted to $3,500 and there was a cost of $10,000 for building a foundation and installing the machinery. It is estimated that the machinery will have a $15,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be

a. $19,700
b. $16,700
c. $14,300
d. $14,000

Answer 1

correct option is b. $16,700

Step-by-step explanation:

given data

purchased = $85,000

Freight charges = $3,500

foundation and installing the machinery cost = $10,000

salvage value = $15,000

to find out

Depreciation expense

solution

we first find here cost that is

cost = $85,000 + $3,500 + $10,000

cost = $98,500

so

Depreciation expense will be here

Depreciation expense =
`(98500 - 15000)/(5)`

Depreciation expense = $16,700

so correct option is b. $16,700