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The Chester Company has just purchased $40,900,000 of plant and equipment that has an estimated useful life of 15 years. The expected salvage value at the end of 15 years is $4,090,000. What will the depreciation expense for this purchase (exclude all other plant and equipment) be for the second year of use

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Answer: $‭2,454,000‬

Explanation:

Assuming a straight line depreciation for this asset, the year 2 (and every year) depreciation expense is;

= (Cost - Salvage value) / Useful life

= (40,900,000 - 4,090,000) / 15

= $‭2,454,000‬

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