Answer:
$4,750
Step-by-step explanation:
Given:
Cost of the equipment = $18,000
Freight charges = $500
Installation cost = $2,500
Estimated salvage value = $2,000
Estimated useful life = 4 years
Now,
The total cost involved with equipment = $18,000 + $500 + $2,500
= $21,000
The Annual depreciation using the straight-line method is given as:
= [tex]\frac{\textup{Total cost - salvage value}}{\textup{useful life}}[/tex]
on substituting the respective values, we get
Annual depreciation = [tex]\frac{\textup{21,000 - 2000}}{\textup{4}}[/tex]
or
Annual depreciation = $4,750
