A machine was purchased on January 1 for $100,000. The machine has an estimated useful life of 4 years with a salvage value of $20,000. Under the straight-line method, accumulated depreciation at the end of year 2 is:

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Under the straight-line method, annual depreciation is calculated as (Cost - Salvage Value) / Useful Life. For this machine, it is ($100,000 - $20,000) / 4 = $20,000 per year. After 2 years, accumulated depreciation is $20,000 x 2 = $40,000.

A Machine Was Purchased on January 1 for $100,000