Question

Sandhill Co. bought a machine on January 1, 2017. The machine cost $158,000 and had an expected salvage value of $27,000. The life of the machine was estimated to be 5 years. The company uses the straight-line method of depreciation. The depreciable cost of the machine is

Answer 1

The depreciable cost of a machine purchased by Sandhill Co. for $158,000 with an expected salvage value of $27,000 is $131,000.

Step-by-step explanation:

The depreciable cost of a machine is a crucial component in calculating depreciation, specifically using the straight-line method. In the case of Sandhill Co.'s machine, valued at $158,000 with an expected salvage value of $27,000, the depreciable cost is determined by subtracting the salvage value from the total cost.

Thus, $158,000 - $27,000 equals $131,000, representing the amount to be depreciated evenly over the machine's useful life. The straight-line method allocates this depreciable cost uniformly, ensuring a consistent annual depreciation expense of $131,000 until the machine's anticipated end of life. This systematic approach simplifies financial planning and facilitates accurate asset valuation over time.