Question

Daily Enterprises is purchasing a

$ 10.4

million machine. It will cost

$45,000

to transport and install the machine. The machine has a depreciable life of five years and will have no salvage value. If Daily uses​ straight-line depreciation, what are the depreciation expenses associated with this​ machine?

Answer 1

Cost of the machine will generally include all such cost which are incurred in order to put the machine into the use.

so it can be said that the purchasing price of the machine will also be including the cost of transportation and installation of the machine for determination of depreciation value.

Cost of machine=(purchasing price+cost of installation and transportation)

=[104,00,000+45000]

= 104,45,000

Amount of depreciation=[cost of machine/number of years]

=[104,45,000/5]

=$ 20,89,000 per year.