Question

On Jan 2nd, Dice Co. purchases a mixing machine for $25,500. The machine is expected to last four years and have a salvage value of $5,500. Assuming the company uses the straight-line method, depreciation expense should be $____ per year.

Answer 1

Depreciation Expense is $5000 per year.

Step-by-step explanation:

The straight line depreciation formula is given as under:

Depreciation = (Cost - Scrap Value) / Useful life

Here:

Cost = $25,500

Scrap Value = $5,500

Useful Life = 4 years

By putting values, we have:

Depreciation = ($25,500 - $5,500) / 4 Years = $5,000