The annual depreciation expense for both 2025 and 2026 using the straight-line method is $9,600.
How to compute depreciation using the straight-line method
To compute depreciation using the straight-line method for the years 2025 and 2026, determine the annual depreciation expense. The formula for straight-line depreciation is:
Annual Depreciation Expense = (Cost - Salvage Value) / Useful Life
Given:
Cost = $83,200
Salvage Value = $6,400
Useful Life = 8 years
For the year 2025:
Annual Depreciation Expense = ($83,200 - $6,400) / 8 = $9,600
For the year 2026:
Annual Depreciation Expense = ($83,200 - $6,400) / 8 = $9,600
Therefore, the annual depreciation expense for both 2025 and 2026 using the straight-line method is $9,600.
Complete question
Suppose that Pharoah purchased a new machine on October 1, 2025 at a cost of $83,200. The company estimated that the machine has a salvage value of $6,400. The machine is expected to be used for 64,000 working hours during its 8 -year life. Compute depreciation using the following methods in the year indicated. (a) Your answer is correct. Straight-line for 2025 and 2026, assuming a December 31 year-end.