A poultry farmer is interested in purchasing an egg tester that can measure weight, albumin height, yolk color, and Haugh units all at the touch of a button. The unit will cost $6,900 and is expected to last 10 years at which point it can be sold for $500 to a farmer in a less stringently controlled egg market. What is the annual depreciation under the straight line method?
A) $640
B) $690
C) $50
D) $740

Question

Quizplus · Accepted Answer

The straight-line method of depreciation allocates the cost of an asset evenly over its useful life. In this case, the asset will cost $6,900 and is expected to last 10 years. Therefore, the annual depreciation expense is $6,900 / 10 = $690.

A Poultry Farmer Is Interested in Purchasing an Egg Tester