Question

At the beginning of 2009 , Glass Manufacturing purchased a new machine for its assembly line at a cost of $600,000. The machine has an estirnated useful life of 10 years and estimated residual value of $50,000. Under the straight-line method, how mech depreciation expenses would Glass record in the 2010 income statement?

A.$55.000
B.$110.000
C.$60,000
D.$65,000

Answer 1

Using the straight-line depreciation method, Glass Manufacturing would record an annual depreciation expense of $55,000 for the year 2010, which means option A is correct.

Step-by-step explanation:

To find the annual depreciation expense using the straight-line method, we must subtract the machine's estimated residual value from the purchase cost and then divide the result by the estimated useful life of the machine. In this case, the purchase cost is $600,000 and the residual value is $50,000, so the depreciable amount is $550,000. Dividing this by the machine's useful life of 10 years, we get an annual depreciation expense of $55,000.

Therefore, for the 2010 income statement, Glass Manufacturing would record an annual depreciation expense of $55,000 under the straight-line method. So, the correct answer is option A: $55,000.