Newell Company purchased a machine 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. Newell estimates that the machine will have a useful life of 10 years and a residual value of $30,000. If Newell 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 cost of the machine is $96,000 - 10% discount + $600 shipping + $4,500 sales tax = $91,200. Depreciable amount = $91,200 - $30,000 residual value = $61,200. Annual depreciation = $61,200 / 10 years = $6,120.

Newell Company Purchased a Machine with a List Price of $96,000