nto a Con tract to aag achin for its factory, Yhe machine, which had a cash pric

Question

nto a Con tract to aag achin for its factory, Yhe machine, which had a cash priceof loo,ooo, was paid as follows: on payment Nofe payablé in lO equal monthly340os nStallments Looo Shares fHuntar comon stact 50,o agreed Lake of $50 Pershane - 30, ooo Tota Prior to the machiniS use n Stslation costs an estimated usefal he of tea years and an estinated, Saliage valv lo,oo en incurrad, the machine hes luge value of S,ood uhat Shoald Hunter recod as depreci he expense for the firs+ year under Straight-Ine method 139, 100 100

Explanation / Answer

Depreciation under straight line method

=( purchase cost + installation costs - salvage value) /10

=(400,000+10000-10000)/10

= 40,000

Answer Option B. 40,000

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