Final answer:
The annual depreciation expense for the bulldozer is $5,600, calculated using the linear depreciation method by subtracting the salvage value from the purchase price and dividing it by the useful life of 19 years.
Step-by-step explanation:
The subject question involves calculating the linear depreciation of a bulldozer. The bulldozer, purchased for $122,800, depreciates linearly over 19 years, with a final salvage value of $16,400. To calculate the annual depreciation expense, we subtract the salvage value from the initial cost and divide by the useful life of the bulldozer.
The formula for the annual depreciation expense is: (Cost - Salvage Value) / Useful Life. Plugging in the numbers gives us: ($122,800 - $16,400) / 19, which simplifies to $106,400 / 19. This results in an annual depreciation expense of $5,600. Thus, each year, the value of the bulldozer decreases by $5,600 due to depreciation.
Linear depreciation is a common method used in accounting to spread out the cost of an asset over its useful life. This method assumes that the asset will lose value at a consistent rate each year until it reaches its predicted salvage value.