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Steele Inc. purchased a machine for $500,000 on January 1, Year1. The machine has a $20,000 residual value and an estimated life of 20 years. The machine is expected to produce 1,000,000 widgets over its life. Steele prepares annual financial statements at 12/31 each year. What is the 'depreciable cost' of the machine? (This would be the same regardless of what method of depreciation is used.)

Respuesta :

Answer: Depreciable cost of the machine = $4,80,000

Explanation:

Machine purchasing cost = $500,000 on January 1, Year 1

Residual value of machine = $20,000

Estimated life of machine = 20 years

machine is expected to produce = 1,000,000 widgets over its life

Depreciable cost of the machine = puchasing cost of machine - Residual value of machine

= $500,000 - $20,000

= $4,80,000

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