Question

* Round all answers to the nearest dollar Your company buys a tower crane for $900,000 on January 1, 2019. It has a 20 year life, it's expected salvage value is $20,000, and total estimated usage is 20,000 hours. Assuming you use straight line depreciation how much is the depreciable amount? $

Answer 1

Answer:

Depreciable amount= $880,000

Explanation:

Giving the following information:

Your company buys a tower crane for $900,000 on January 1, 2019. It has a 20-year life, it's expected salvage value is $20,000.

To calculate the annual depreciation, we need to use the following formula:

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (900,000 - 20,000)/20= $44,000

Depreciable amount= original cost - salvage value= 880,000