Question

ABC Company is considering acquiring a new machine that costs $56,000. The machine has a 3-year useful life and a $5,000 salvage value. The tax rate for ABC Company is 20%. What amount of depreciation expense should ABC Company recognize each year?

Answer 1

Answer:

$13.600

Explanation:

Depreciable total value = $56.000 - $ 5.000 =  $51.000

Anual depreciable before tax =$ $\frac{51.000}{3}$ = $17.000

Anual depreciable after tax =  $17.000 x (1-0.2) = $13.600