Question

Equipment was purchased for $151000. Freight charges amounted to $6000 and there was a cost of $14000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $36000 salvage value at the end of its 5-year useful life. Depreciation Expense each year using the straight-line method will be

Answer 1

Answer: $27000

Step-by-step explanation:

The formula for straight line depreciation will be:

= (Cost of asset - Salvage value) / Useful life of asset

Cost of asset = $151000 + $6000 + $14000 = $171000

Straight line Depreciation = ($171000 - $36000) / 5

= $135000/5

= $27000