Answer:
The annual straight line depreciation for this asset is $400,000
Explanation:
Total cost of the asset = Purchased cost + installation costs
= $7,500,000 + $300,000 = $7,800,000
The firm uses the straight-line depreciation method, Depreciation Expense each year is calculated by following formula:
Annual Depreciation Expense = (Cost of Asset − Salvage Value )/Useful Life
In there, the asset will have salvage value of $1,800,000 and useful life of 15 years
Annual Depreciation Expense = ($7,800,000 - $1,800,000)/15 = $6,000,000/15 = $400,000
