If the straight-line method of depreciation of an asset with a 5-year life expectancy and no salvage value is used, then the percentage of cost that is recognized as depreciation expense for the first two years of the asset's life is, respectively,
A)25% and 25%.
B)40% and 20%.
C)40% and 40%.
D)20% and 20%.

Question

Quizplus · Accepted Answer

The straight-line method allocates an equal percentage of the asset's cost as depreciation each year. With a 5-year life, the annual depreciation rate is 20% (100% / 5 years). Thus, for the first two years, it is 20% each year.

If the Straight-Line Method of Depreciation of an Asset with a 5-Year