Question

On January 1, 2018, Jordan, Inc. acquired a machine for $1,100,000. The estimated useful life of the asset is five years. Residual value at the end of five years is estimated to be $61,000. Calculate the depreciation expense per year using the straight-line method.

Answer 1

$207,800

Step-by-step explanation:

Given that,

Cost of machine = $1,100,000

Estimated useful life = 5 years

Residual value at the end of five years = $61,000

Depreciation refers to the fall in the value of the fixed assets with the passage of time. Here, we are using the straight-line method.

Depreciation expense per year:

= (Cost of machine - Residual value) ÷ Useful life

= ($1,100,000 - $61,000) ÷ 5 years

= $1,039,000 ÷ 5 years

= $207,800