Answer:
$3,120
Explanation:
First and foremost, annual depreciation expense is determined using the below straight-line method formula:
annual depreciation=total cost of equipment-salvage value/useful life
total cost of equipment=purchase price+ transportation cost
total cost of equipment=$15,200+$1,300
total cost of equipment=$16,500
salvage value=$5,700
useful life =5 years
annual depreciation=($16,500-$5,700)/5
annual depreciation=$2,160
net income=cash revenue-cash expenses-annual depreciation+profit/(loss) on disposal
profit or(loss)=sales proceeds-book value
book value=cost-accumulated depreciation for 3 years
book value=$16,500-($2160*3)=$10,020
profit/(loss) on disposal=$8,900-$10,020=-$1,120
net income= $17,400-$11,000-$2,160-$1,120
net income=$3,120
