Question

Cheetah Copy purchased a new copy machine. The new machine cost $140,000 including installation. The company estimates the equipment will have a residual value of $35,000. Cheetah Copy also estimates it will use the machine for four years or about 8,000 total hours. Actual use per year was as follows: Year Hours Used 1 3,000 2 2,000 3 2,000 4 2,000 Required: 1. Prepare a depreciation schedule for four years using the straight-line method. (Do not round your intermediate calculations.)

Answer 1

Depreciation expense in year 1 = $26,250

Depreciation expense in year 2 = $26,250

Depreciation expense in year 3 = $26,250

Depreciation expense in year 4 = $26,250

Step-by-step explanation:

Straight line depreciation expense = (Cost of asset - Salvage value) / useful life

($140,000 - $35,000) / 4 = $26,250