Newman Co.purchased CNC router cutting and engraving machinery at a cost of $320,000 in January 2019.The company's estimated useful life of this high tech equipment is 5 years, and the estimated salvage value is $48,000. Using the straight-line method, the depreciation expense to be recognized for 2019, the first year of the machinery's life, would be:

Question

Quizplus · Accepted Answer

The straight-line method of depreciation allocates the cost of an asset evenly over its useful life. The formula for calculating depreciation expense using the straight-line method is:Depreciation expense = (Cost of asset - Salvage value) / Useful lifeIn this case, the cost of the asset is $320,000, the salvage value is $48,000, and the useful life is 5 years. Therefore, the depreciation expense for 2019, the first year of the machinery's life, would be:Depreciation expense = ($320,000 - $48,000) / 5 = $54,400

Newman CoPurchased CNC Router Cutting and Engraving Machinery at a Cost