Question

On January 1, a machine with a useful life of 10 years and a salvage value of 5,000 was purchased for50,000. What is the annual depreciation expense using the straight-line method?

1) $5,000
2) $4,500
3) $4,000
4) $3,500

Answer 1

The annual depreciation expense for a machine purchased for $50,000 with a salvage value of $5,000 over a useful life of 10 years is $4,500 using the straight-line method.

Step-by-step explanation:

To calculate annual depreciation expense using the straight-line method, you take the cost of the asset, subtract the salvage value, and divide by the useful life of the asset. For a machine purchased for $50,000 with a salvage value of $5,000 and useful life of 10 years, the calculation would be:

Depreciation Expense = (Cost of Asset - Salvage Value) / Useful Life

Depreciation Expense = ($50,000 - $5,000) / 10 = $45,000 / 10 = $4,500

Therefore, the annual depreciation expense is $4,500, which means the correct answer is 2) $4,500.