Question

Jackson Implements, Inc. uses straight-line depreciation for an item of equipment that cost $135,000, had a salvage value of $15,000, and had a six-year useful life. Determine the amount of depreciation to be charged against the machine during each of the six years of its useful life using straight line depreciation. Group of answer choices $15,000 $25,000 $20,000 $18,000

Answer 1

Answer:

the depreciation that should be charged over the useful life each year is $20,000

Explanation:

The computation of the depreciation expense using the straight line method is shown below:

= (Purchase cost of an equipment - residual value) ÷ (useful life)

= ($135,000 - $15,000) ÷ 6 years

= $120,000 ÷ 6 years

= $20,000

hence, the depreciation that should be charged over the useful life each year is $20,000