Question

On January​ 1, 2018, Jordan Company acquired a machine for​ $1,090,000. The estimated useful life of the asset is five years. Residual value at the end of five years is estimated to be​ $60,000. Calculate the depreciation expense per year using the​ straight-line method.

Answer 1

Answer:

$206000.

Explanation:

Given: Asset purchase value = $\ 1090000$

          Residual value after five years= $\ 60000$

          Estimated useful life of asset= five years.

Now, we will calculate depreciation per year using straight line method.

Depreciation= $\frac{(purchased\ value\ of\ asset - residual\ value)}{estimated\ useful\ life\ of\ asset}$

⇒ Depreciation = $\frac{(1090000 - 60000)}{5} = \frac{1030000}{5}$

∴ Depreciation expense per year = $\ 20600$