Final answer:
Using the straight-line method of depreciation, the annual depreciation expense for the machine is $1,500. This is calculated by subtracting the machine's residual value from its cost and dividing by its useful life ($12,000 / 8 years).
Step-by-step explanation:
Calculation of Depreciation Using the Straight-Line Method
To calculate the amount of depreciation for Year 2 using the straight-line method, we must first understand what the straight-line method entails. The straight-line method spreads the cost of the asset evenly over its useful life. To calculate the annual depreciation expense, subtract the estimated residual value from the cost of the asset, and then divide by the estimated service life.
In this case, the machine's cost is $18,000, and the estimated residual value is $6,000. This leaves us with a depreciable base of $12,000. Since the estimated service life is 8 years, we divide $12,000 by 8 to determine the annual depreciation expense.
$12,000 depreciable base / 8 years = $1,500 annual depreciation expense
Therefore, the amount of depreciation for Year 2, as well as for each year of the asset's service life using the straight-line method, is $1,500.
The correct answer to the question is (d) $1,500.