Since 2001, TSAY Steel has replaced all its major manufacturing equipment and now has the following equipment recorded in the appropriate accounts. TSAY uses a calendar year as its fiscal year. A forge purchased January 1, 2000, for $100,000. Ordinary and necessary installation costs were $20,000, and the forge has an estimated 5-year life with a salvage value of $10,000. A grinding machine costing $45,000 purchased January 1, 2002. The machine has an estimated 5-year life with a salvage value of $5,000. A lathe purchased January 1, 2004 for $60,000. The lathe has an estimated 5-year life and a salvage value of $7,000. Using the straight-line depreciation method, TSAY's 2004 depreciation expense is:
a. $45,000
b. $40,334
c. $40,600
d. $40,848
Ans: c. $40,600
Business
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