Columbia Manufacturing Corp.purchased a new lathe machine for its baseball bat manufacturing plant on January 1.The machine cost $12,000 and is expected to be used in production for 4 years at which time its estimated salvage value will be $2,000.The yearly straight-line depreciation for this asset would be
A)$2,500
B)$3,000
C)$4,000
D)$12,000
E)$9,500

Question

Quizplus · Accepted Answer

The yearly straight-line depreciation is calculated by subtracting the salvage value from the cost and then dividing by the useful life. ($12,000 - $2,000) / 4 = $2,500.