A company purchased an air conditioning system for $10,200. Shipping charges on the system are $875. Setup costs were $1,250. The system is expected to last for 5yrs and has a residual value at $2000. If I use the straight-line method to calculate depreciation for this air condition system, what would be the annual depreciation?

To calculate the annual depreciation of the air conditioning system using the straight-line method, you need to subtract the residual value from the initial cost and then divide by the useful life of the system.

The initial cost of the air conditioning system is $10,200, and the residual value is $2,000. Therefore, the depreciable cost is $10,200 - $2,000 = $8,200.

The useful life of the system is 5 years.

To find the annual depreciation, divide the depreciable cost by the useful life:
$8,200 / 5 = $1,640.

Therefore, the annual depreciation of the air conditioning system using the straight-line method would be $1,640.

To calculate the annual depreciation using the straight-line method, you need to determine the depreciable cost of the air conditioning system and divide it by the useful life of the system.

The depreciable cost is the original cost of the system minus its expected residual value.

Original cost of the system = $10,200
Residual value = $2,000

Depreciable cost = Original cost - Residual value
Depreciable cost = $10,200 - $2,000
Depreciable cost = $8,200

Next, you need to divide the depreciable cost by the useful life of the system, which is 5 years, to get the annual depreciation.

Annual depreciation = Depreciable cost / Useful life
Annual depreciation = $8,200 / 5
Annual depreciation ≈ $1,640

Therefore, the annual depreciation of the air conditioning system using the straight-line method would be approximately $1,640.