Question

The cash price of this machine was $54,500. related expenditures also paid in cash included: sales tax $2,050, shipping costs $100, insurance during shipping $110, installation and testing costs $80, and $100 of oil and lubricants to be used with the machinery during its first year of operations. whispering winds estimates that the useful life of the machine is 5 years with a $4,100 salvage value remaining at the end of that time period. assume that the straight-line method of depreciation is used. the recorded cost of this machine was $180,000whispering winds estimates that the useful life of the machine is 4 years with a $10,600 salvage value remaining at the end of that time period

Answer 1

The cash price of the machine was $54,500. Whispering Winds estimates that the useful life of the machine is 4 years with a salvage value of $10,600 remaining at the end of that time period.

Step-by-step explanation:

The cash price of the machine was $54,500. Additional expenditures also paid in cash include sales tax of $2,050, shipping costs of $100, insurance during shipping of $110, installation and testing costs of $80, and $100 for oil and lubricants to be used with the machine during its first year of operations.

The recorded cost of the machine was $180,000. Whispering Winds estimates that the useful life of the machine is 4 years with a salvage value of $10,600 remaining at the end of that time period. The straight-line method of depreciation is used to calculate the annual depreciation expense.

To calculate the annual depreciation expense, subtract the salvage value from the recorded cost of the machine and divide by the useful life of the machine: ($180,000 - $10,600) ÷ 4 = $42,350. This is the annual depreciation expense.