Final answer:
The annual depreciation expense for Montineau Corporation's new machine, calculated using the straight-line method, is $11,285.71.
Step-by-step explanation:
To calculate the annual depreciation expense using the straight-line method, you need to deduct the estimated residual value from the initial cost and then divide by the useful life of the asset. In this case, Montineau Corporation is considering purchasing a machine for $91,000 with a 7-year useful life and a $12,000 estimated residual value.
The formula for straight-line depreciation is:
Depreciation Expense = (Cost - Residual Value) / Useful Life
Therefore:
Depreciation Expense = ($91,000 - $12,000) / 7 years
Depreciation Expense = $79,000 / 7 years
Depreciation Expense = $11,285.71 per year
The annual depreciation expense Montineau Corporation will record for this machine is $11,285.71.