Question

Equipment was purchased for $150,000. Freight charges amounted to $7,000 and there was a cost of $20,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $30,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be:

Answer 1

Answer:

$29,400

Explanation:

Straight line depreciation expense = (cost of asset - Salvage value) / useful life

Cost of asset = $150,000 + $20,000 + $7,000 = $177,000

($177,000 - $30,000) / 5 = $29,400

I hope my answer helps you