A machine was purchased for $30 000 with a life expectancy of five years and a zero residual value. Under the straight-line method, the depreciation expense would be calculated at 20% per annum of the cost.

Question

Quizplus · Accepted Answer

The straight-line method calculates the same amount of depreciation expense each year based on the cost of the asset and its useful life. In this case, the annual depreciation expense would be $6,000 (20% of $30,000), and over the five-year life of the machine, the total accumulated depreciation would be $30,000, resulting in a zero residual value.

A Machine Was Purchased for $30 000 with a Life