Stine Company purchased machinery with a list price of $96,000.They were given a 10% discount by the manufacturer.They paid $600 for shipping and sales tax of $4,500.Stine estimates that the machinery will have a useful life of 10 years and a residual value of $30,000.If Stine uses straight-line depreciation, annual depreciation will be
A)$6,150.
B)$6,108.
C)$9,150.
D)$5,640.

Question

Quizplus · Accepted Answer

The correct answer is A.The cost of the machinery is $96,000 - (96,000 * 10%) = $86,400. The total cost of the machinery, including shipping and sales tax, is $86,400 + $600 + $4,500 = $91,500. The annual depreciation expense is ($91,500 - $30,000) / 10 = $6,150.

Stine Company Purchased Machinery with a List Price of $96,000