Question

On January​ 1, 2018,​ Jordan, Inc. acquired a machine for $ 1,000,000. The estimated useful life of the asset is five years. Residual value at the end of five years is estimated to be $ 60,000. Calculate the depreciation expense per year using the straightminusline method.

Answer 1

Annual depreciation=$188,000

Step-by-step explanation:

Giving the following information:

Purchasing price= $1,000,000

Salvage value= $60,000

Useful life= 5 years

To calculate the depreciation expense under the straight-line method, we need to use the following formula:

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

Annual depreciation= (1,000,000 - 60,000)/5

Annual depreciation=$188,000