Under the straight-line method, if an asset costs $10,000, has a salvage value of $1,000, and a useful life of 5 years, what is the annual depreciation expense?

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$1,800
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Q: Under the straight-line method, if an asset costs $10,000, has a salvage value of $1,000, and a useful life of 5 years, what is the annual depreciation expense?

Solution: Annual Depreciation Expense = (Cost - Salvage Value) / Useful Life = ($10,000 - $1,000) / 5 = $1,800.

Steps: 5

Step 1: Identify the cost of the asset. In this case, the cost is $10,000.
Step 2: Identify the salvage value of the asset. Here, the salvage value is $1,000.
Step 3: Identify the useful life of the asset. The useful life is 5 years.
Step 4: Calculate the total depreciation amount by subtracting the salvage value from the cost: $10,000 - $1,000 = $9,000.
Step 5: Divide the total depreciation amount by the useful life to find the annual depreciation expense: $9,000 / 5 = $1,800.

Under the straight-line method, if an asset costs $10,000, has a salvage value of $1,000, and a useful life of 5 years, what is the annual depreciation expense?

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