ABC Corporation purchased a piece of machinery for $100,000 on January 1, 2020. The machinery has an estimated useful life of 5 years and a salvage value of $10,000. Using the straight-line depreciation method, calculate the depreciation expense for the year ended December 31, 2023.

In your response, apply the straight-line depreciation method and show the calculation for the annual depreciation expense. Additionally, discuss the impact of depreciation on the company's financial statements and cash flows. Explain how recognizing depreciation expense affects the carrying value of the machinery on the balance sheet and the company's net income on the income statement. Provide insights into the importance of accurately recording depreciation for financial reporting purposes and assessing the true economic value of the asset over its useful life.