On January 1,20A,Straight,Inc.,purchased a machine with a cash price of $9,500.Straight also paid $500 for transportation and installation.The expected useful life of the machine is 5 years and the residual value is $500.Assuming straight-line depreciation,the annual depreciation expense would be which of the following?
A)$1,800
B)$1,900
C)$2,000
D)$2,100

Question

Quizplus · Accepted Answer

The total cost of the machine is $10,000 ($9,500 + $500). The depreciable amount is $9,500 ($10,000 - $500 residual value). Dividing this by the useful life of 5 years gives an annual depreciation expense of $1,900.