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Avalon Industries buys equipment for $50,000, expects to use it for Five years, and then sell it for $6,200. Using the straight-line method, the company should report annual depreciation for the equipment of:

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Answer:

Annual depreciation= $8,760

Explanation:

Giving the following information:

Avalon Industries buys equipment for $50,000, expects to use it for Five years, and then sell it for $6,200.

We need to use the following formula:

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

Annual depreciation= (50,000 - 6,200)/5= $8,760

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