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12 January, 16:02

On January 1, 2018, Jordan, Inc. acquired a machine for $ 1,000,000. The estimated useful life of the asset is five years. Residual value at the end of five years is estimated to be $ 60,000. Calculate the depreciation expense per year using the straightminusline method.

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  1. 12 January, 18:30
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    Annual depreciation=$188,000

    Explanation:

    Giving the following information:

    Purchasing price = $1,000,000

    Salvage value = $60,000

    Useful life = 5 years

    To calculate the depreciation expense under the straight-line method, we need to use the following formula:

    Annual depreciation = (original cost - salvage value) / estimated life (years)

    Annual depreciation = (1,000,000 - 60,000) / 5

    Annual depreciation=$188,000
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