Question

Sunland Company purchased a new machine on October 1, 2017, at a cost of $80,360. The company estimated that the machine has a salvage value of $7,910. The machine is expected to be used for 70,800 working hours during its 7-year life. Compute the depreciation expense under the straight-line method for 2017 and 2018, assuming a December 31 year-end. (Round answers to 2 decimal places, e.g. 5,275.25.) 2017 2018 The depreciation expense under the straight-line method

Answer 1

2017 = $2,587.50

2018 = $10,350

Step-by-step explanation:

The computation of the depreciation expense using the straight line method for the year 2017 and 2018 are shown below:

As we know that

The formula to compute the depreciation expense under the straight-line method is

= (Purchased Cost - salvage value) ÷ useful life

For 2017 year

= ($80,360 - $7,910) ÷ 7 year

= $10,350

For 3 months, it is

= $10,350 × 3 ÷ 12

= $2,587.50

And, for 2018, it is $10,350