Pearson Company bought a machine on January 1, 2017. The machine cost $180,000 and had an expected salvage value of $30,000. The life of the machine was estimated to be 5 years. The depreciable cost of the machine is
A)$180,000.
B)$150,000.
C)$50,000.
D)$30,000.

Question

Quizplus · Accepted Answer

Depreciation = (Cost - Salvage Value) / Useful life
Depreciation = ($180,000 - $30,000) / 5 = $30,000 per year
Therefore, the depreciable cost of the machine is $180,000 - $30,000 = $150,000.

Pearson Company Bought a Machine on January 1, 2017