On January 1,2019,Woodstock,Inc.purchased a machine costing $40,000.Woodstock also paid $1,000 for transportation and installation.The expected useful life of the machine is 6 years and the residual value is $5,000. How much is the annual depreciation expense,assuming use of the straight-line depreciation method?

Question

Quizplus · Accepted Answer

The depreciable cost of the machine is $40,000 - $5,000 = $35,000. 
The annual depreciation expense using straight-line method is:
($35,000 / 6 years) = $5,833.33 
Rounding up to the nearest dollar, the answer is $6,000.