If a machine cost $50,000 initially and is expected to last for 20 years but is worth $60,000 after one year because it is in short supply, an accountant most likely would say that:
A) the machine's cost for each of its 20 years of existence is $2,500.
B) the machine's cost for each of its 20 years of existence is $3,000.
C) during the first year the machine had no cost; it provided a revenue to the firm.
D) the value of the machine will continue to increase 20 percent per year for the next 20 years.

Question

Quizplus · Accepted Answer

The machine's cost is typically spread evenly over its useful life, which is $50,000/20 years = $2,500 per year.

If a Machine Cost $50,000 Initially and Is Expected to Last