Tomko Company purchased machinery with a list price of $96000. They were given a 10% discount by the manufacturer. They paid $600 for shipping and sales tax of $4500. Tomko estimates that the machinery will have a useful life of 10 years and a residual value of $30000. If Tomko uses straight-line depreciation annual depreciation will be
A) $6150.
B) $6108.
C) $9150.
D) $5640.

Question

Quizplus · Accepted Answer

The cost of the machinery is $96000 - 10% discount + $600 shipping + $4500 sales tax = $87900. The depreciable amount is $87900 - $30000 residual value = $57900. Annual depreciation is $57900 / 10 years = $5790.

Tomko Company Purchased Machinery with a List Price of $96000