Lomani Ltd acquired two new machines for cash on 1 January 2017. The cost of machine A was $400 000, plus GST, and of machine B, $600 000, plus GST. Each
machine was expected to have a useful life of 10 years, and residual values were
estimated at $20 000 for machine A and $50 000 for machine B.

The depreciation expense will be

Machine A : $38,000

Machine B : $55,000

Explanation:

Straight line depreciation recognize an assets carrying amount evenly over its useful life.

Straight line Depreciation = (Cost - Estimated Residual Value) / useful life

Depreciation expense for Machine A:

($400,000 - $20,000) / 10 years

= $38,000

Depreciation expense for Machine B:

($600,000 - $50,000) / 10 years

= $55,000