Newell Company purchased a machine with a list price of $160,000.They were given a 10% discount by the manufacturer.They paid $1,000 for shipping and sales tax of $7,500.Newell estimates that the machine will have a useful life of 10 years and a salvage value of $50,000.If Newell uses straight-line depreciation, annual depreciation will be
A)$10,250.
B)$10,180.
C)$15,250.
D)$9,400.

Question

Quizplus · Accepted Answer

The cost of the machine is $160,000 - 10% discount = $144,000. Adding shipping and sales tax, the total cost is $144,000 + $1,000 + $7,500 = $152,500. The depreciation expense is calculated as (Cost - Salvage Value) / Useful Life = ($152,500 - $50,000) / 10 = $10,250.

Newell Company Purchased a Machine with a List Price of $160,000.They