Question

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines' first year depreciation under the straight-line method. Multiple Choice $27,000. $29,025. $23,779. $24,000. $25,800.

Answer 1

Answer:

The straight line depreciation for the first year is $24000

Explanation:

The straight line method of depreciation charges/allocates a constant amount of depreciation through out the useful life of the asset. The straight line depreciation expense for the year is calculated as follows,

Straight line depreciation = (Cost - Salvage Value) / Estimated useful life

Straight line depreciation = (135000 - 15000) / 5  = $24000 per year

Thus, the amount of depreciation for first year under straight line method is $24000