QUESTION:

A company purchased a machine for $100,000 with a useful life of 10 years and no residual value. Using the straight-line depreciation method, what would be the depreciation expense in the first year?

Answer:

The depreciation expense in the first year would be $10,000 ($100,000 / 10 years).

To calculate the depreciation expense using the straight-line method, we use the formula:

Depreciation expense = (Cost - Residual value) / Useful life

In this case, the cost of the machine is $100,000, the useful life is 10 years, and there is no residual value. Substituting these values into the formula, we get:

Depreciation expense = ($100,000 - $0) / 10 years

Simplifying the equation, we get:

Depreciation expense = $100,000 / 10 years

Depreciation expense = $10,000

Therefore, the depreciation expense in the first year using the straight-line method would be $10,000.