Final answer:
The annual depreciation expense for Smart Touch Learning's equipment is calculated to be $13,400 using the straight-line depreciation method, which is found by dividing the depreciable base of $134,000 (original cost minus residual value) by the useful life of 10 years.
Step-by-step explanation:
The calculation of annual depreciation expense under the straight-line method involves subtracting the residual value from the cost of the asset and then dividing that by the useful life of the asset. In this case, Smart Touch Learning purchased equipment for $140,000, with a residual value of $6,000, and an estimated useful life of 10 years.
The annual depreciation expense formula is:
Annual Depreciation Expense = (Cost of the Asset - Residual Value) / Useful Life of the Asset
Plugging in the given values:
Annual Depreciation Expense = ($140,000 - $6,000) / 10 years
Annual Depreciation Expense = $134,000 / 10 years
Annual Depreciation Expense = $13,400
Therefore, the annual depreciation expense for the equipment is $13,400.