Answer:
Annual depreciation= $17,500
Explanation:
Giving the following information:
A lumber company purchases and installs a wood chipper for $200,000. The chipper’s useful life is 10 years. The estimated salvage value at the end of 10 years is $25,000.
Under the straight-line method of depreciation, we need to use the following formula to calculate the depreciation expense:
Annual depreciation= (original cost - salvage value)/estimated life (years)
Annual depreciation= (200,000 - 25,000)/10
Annual depreciation= $17,500
