A machine bought for #35,000 was estimated to have a life span of 5 years with a scrap value of #9,000.If the scrap value is presently #15,000 what will be ...

A machine bought for #35,000 was estimated to have a life span of 5 years with a scrap value of #9,000.If the scrap value is presently #15,000 what will be the yearly depreciation using straight line method?

Answer Details

The straight line method of depreciation is a way to calculate the value that an asset loses each year over its useful life. To do this, you subtract the asset's scrap value (the amount it can be sold for at the end of its life) from its original cost, and then divide the result by the number of years it is expected to last. In this case, the original cost of the machine was #35,000 and its scrap value was estimated to be #9,000. However, the scrap value is now #15,000, so we'll use that instead. 35,000 - 15,000 = 20,000 20,000 ÷ 5 years = 4,000 So the yearly depreciation of the machine using the straight line method is #4,000.