question 3\nwhat is the second - year depreciation using the straight - line method in the following…

question 3\nwhat is the second - year depreciation using the straight - line method in the following example. purchase price $1,250,000 set up and install $55,000 salvage value $118,000 life expectancy - seven years

question 3\nwhat is the second - year depreciation using the straight - line method in the following example. purchase price $1,250,000 set up and install $55,000 salvage value $118,000 life expectancy - seven years

Answer

Explanation:

Step1: Calculate total cost

The total cost of the asset is the sum of the purchase price and the set - up and install cost. So, the total cost $C = 1250000+55000=1305000$.

Step2: Calculate depreciable cost

The depreciable cost $D$ is the total cost minus the salvage value. So, $D = 1305000 - 118000=1187000$.

Step3: Calculate annual depreciation

Using the straight - line method, the annual depreciation $A$ is the depreciable cost divided by the life expectancy. So, $A=\frac{1187000}{7}\approx169571.43$.

Answer:

$169571.43$