Kwan Enterprises purchased machinery on 1 January 2023 for $48,000. The machinery has an estimated useful life of 8 years and a residual value of $8,000. Using the straight-line method, what is the annual depreciation charge?

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Question

Kwan Enterprises purchased machinery on 1 January 2023 for $48,000. The machinery has an estimated useful life of 8 years and a residual value of $8,000. Using the straight-line method, what is the annual depreciation charge?

Accepted Answer

$5,000 — Award 1 mark for correct calculation: ($48,000 – $8,000) ÷ 8 years = $5,000. C is incorrect — this divides cost by useful life without deducting residual value ($48,000 ÷ 8). D is incorrect — arithmetic error. A is incorrect — this uses an incorrect formula.

Answer

$5,000

Answer

$5,500

Answer

$4,000

Answer

$6,000

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