Answer:
The answer is $11,500
Explanation:
Depreciation here be done separately or in components.
The formula for depreciation is:
(Cost - residual value) / useful life.
First component:
A new machine for $100,000 and useful life is 20 years.
Depreciation = $100,000/20years
= $5,000
Second component:
An electrical motor for $20,000 and useful life is 5 years.
Depreciation = $20,000/5years
= $4,000
Third component:
Inspection $10,000 and useful life is 4 years.
Depreciation = $10,000/4years
= $2,500
Therefore, the depreciation expense for Year 1 is
=$5,000 + $4,000 + $2,500
=$11,500
