Question

Raine Industries bought a machine at the beginning of the year at a cost of $21,000. The estimated useful life was five years and the residual value was $2,000. Required: 1. Complete a depreciation sc

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Answer 1

To calculate annual depreciation for Raine Industries machine using the straight-line method, subtract the residual value from the cost of the asset and divide it by the estimated useful life, resulting in a yearly expense of $3,800.

Step-by-step explanation:

The question from the student involves calculating the annual depreciation expense for a machine bought by Raine Industries. Firstly, we need to know the formula for depreciation using the straight-line method. The formula is (Cost of the asset - Residual value) / Estimated useful life. In this case, the cost of the asset is $21,000, the residual value is $2,000, and the estimated useful life is 5 years.

To calculate the annual depreciation expense:

1. Subtract the residual value from the cost of the asset: $21,000 - $2,000 = $19,000.
2. Divide that number by the estimated useful life of the asset: $19,000 / 5 years = $3,800.

The annual depreciation expense would be $3,800.

This calculation represents the amount of the asset's cost Raine Industries will allocate as an expense for each year of the machine's estimated useful life.

Answer 2

The student's question relates to calculating the annual depreciation expense of a machine using the straight-line method. Subtracting the residual value from the original cost and dividing by the useful life provides an annual depreciation of $3,800.

Step-by-step explanation:

The student is asking for calculations related to the concept of depreciation, which is a business and accounting concept. The specific method of depreciation to be used appears to be the straight-line method, as the information provided includes the original cost of the asset, its estimated useful life, and its residual value. To calculate the annual depreciation expense, we subtract the residual value from the original cost and then divide by the estimated useful life of the asset.

Calculation of Annual Depreciation Expense:

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• Original cost of the machine: $21,000
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• Estimated useful life: 5 years
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• Residual value: $2,000
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• Depreciation expense per year: (Original cost - Residual value) / Useful life
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• Depreciation expense per year: ($21,000 - $2,000) / 5 = $3,800

The annual depreciation expense for the machine will be $3,800.