Apurchase of equipment for $18,000 also involved freight charges of $500 and installation costs of $2,500. the estimated salvage value and useful life are $2,000 and 4 years, respectively. under the straight-line method, annual depreciation expense will be
a. $4,750
b. $4,500
c. $4,125
d. $4,625

$4,750

Explanation:

The computation of the depreciation expense is shown below:

= (Original cost - residual value) ÷ (useful life)

where,

Original cost = $18,000 + $500 + $2,500 = $21,000

And, the other items would remain same

Now put these values to the above formula

So, the value would be equal to

= ($21,000 - $2,000) ÷ (4 years)

= ($19,000) ÷ (4 years)  

= $4,750

answer; commerce clearing house;

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