Equipment was purchased for $45,000. Freight charges amounted to $500 and there was a cost of $2,500 for building a foundation and installing the equipment. It is estimated that the equipment will have a $8,000 residual value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be:
A) $9,600.
B) $8,000.
C) $9,000.
D) $7,400.

Question

Quizplus · Accepted Answer

Annual depreciation expense will be ((45,000 + 500 + 2,500 - 8,000)/5) = $8,000.

Equipment Was Purchased for $45,000