Question

Question Content Area A copy machine acquired on May 1 with a cost of $2,545 has an estimated useful life of 3 years. Assuming that it will have a residual value of $445, determine the depreciation for the first and second years by the straight-line method. Round your answers to the nearest whole dollar.

a) $800 for the first year, $800 for the second year
b) $800 for the first year, $882 for the second year
c) $893 for the first year, $893 for the second year
d) $893 for the first year, $980 for the second year

Answer 1

The depreciation for the first and second years by the straight-line method is $700 for each year.

Step-by-step explanation:

To find the depreciation for the first and second years by the straight-line method, we need to determine the annual depreciation amount. This can be calculated by subtracting the residual value from the cost of the copy machine, and then dividing the result by the useful life of the machine.

Annual depreciation = (Cost - Residual value) / Useful life

For the given copy machine, the cost is $2,545 and the residual value is $445. The useful life is 3 years.

Annual depreciation = ($2,545 - $445) / 3

Annual depreciation = $2,100 / 3

Annual depreciation = $700

Therefore, the depreciation for the first and second years by the straight-line method is $700 for each year.