If an asset costs $10,000, has a salvage value of $1,000, and a useful life of 5

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What’s inside this PDF?

Question: 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 using the straight-line method?

Options:

$1,800
$2,000
$1,500
$1,200

Correct Answer: $2,000

Solution:

Annual depreciation = (Cost - Salvage Value) / Useful Life = ($10,000 - $1,000) / 5 = $2,000.

If an asset costs $10,000, has a salvage value of $1,000, and a useful life of 5

Practice Questions

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 using the straight-line method?

$1,800
$2,000
$1,500
$1,200

Questions & Step-by-Step Solutions

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 using the straight-line method?

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 in years. The useful life is 5 years.
Step 4: Calculate the total depreciation by subtracting the salvage value from the cost. This is $10,000 - $1,000 = $9,000.
Step 5: Divide the total depreciation by the useful life to find the annual depreciation. This is $9,000 / 5 = $1,800.

Straight-Line Depreciation – A method of allocating the cost of an asset evenly over its useful life.

If an asset costs $10,000, has a salvage value of $1,000, and a useful life of 5

What’s inside this PDF?

If an asset costs $10,000, has a salvage value of $1,000, and a useful life of 5

Practice Questions

Questions & Step-by-Step Solutions

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