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Cullumber Company purchased a new machine on October 1, 2017, at a cost of $90,880. The company estimated that the machine has a salvage value of $8,640. The machine is expected to be used for 72,700 working hours during its 8-year life. Compute the depreciation expense under the straight-line method for 2017 and 2018, assuming a December 31 year-end.

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Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Cullumber Company purchased a new machine on October 1, 2017, at a cost of $90,880. The company estimated that the machine has a salvage value of $8,640. 8 Year life.

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (90,880 - 8,640)/8= $10,280

2017= 10,280/12*3= $2,570

2018= $10,280

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