Question

Newman Co. purchased CNC router cutting and engraving machinery at a cost of $320,000 in January 2019. The company’s estimated useful life of this high tech equipment is 5 years, and the estimated salvage value is $48,000.Using the straight-line method, the depreciation expense to be recognized for 2019, the first year of the machinery’s life, would be:a. $128,000.b. $73,600.c. $64,000.d. $54,400.

Answer 1

Depreciation Expense = $54400

Step-by-step explanation:

The straight line depreciation charges a cosntant depreciation expense throughout the useful life of an asset.

The formula to calculate the straighline depreciation on an asset is,

Depreciation expense per year = (Cost - Salvage Value) / useful life

Thus,

The depreciation expense per year on Newman Co. CNC router cutting and engraving machinery is,

Depreciation Expense per year = (320000 - 48000) / 5

Depreciation expense = $54400