On January 1, 2018, Jordan, Inc. acquired a machine for $1,100,000. The estimated useful life of the asset is five years. Residual value at the end of five years is estimated to be $61,000. Calculate the depreciation expense per year using the straight-line method.

Question

Quizplus · Accepted Answer

To calculate the annual depreciation expense using the straight-line method, we need to subtract the residual value from the cost of the asset and divide it by the useful life in years.

Depreciation expense per year = (Cost of asset – Residual value) / Useful life

Depreciation expense per year = ($1,100,000 - $61,000) / 5

Depreciation expense per year = $207,800

Therefore, the correct choice is B, which is $207,800.