A company expects to use equipment that cost $48,000 for ten years and then sell it for $6,000. Using the straight-line method, the company should report depreciation for the equipment of:
A) $4,200 per year.
B) $8,400 per year.
C) $4,800 per year.
D) $9,600 per year.

Question

Quizplus · Accepted Answer

The straight-line depreciation method calculates annual depreciation by subtracting the salvage value from the cost and dividing by the useful life. ($48,000 - $6,000) / 10 years = $4,200 per year.

A Company Expects to Use Equipment That Cost $48,000 for Ten