An asset being depreciated with the straight-line method has a residual value of $10,000 and accumulated depreciation of $30,000 in its second year.What was the original cost of the asset if its useful life was 5 years?
A)$160,000
B)$140,000
C)$ 85,000
D)$75,000

Question

Quizplus · Accepted Answer

Using the straight-line depreciation method, the asset's annual depreciation can be calculated as:
Annual Depreciation = (Original Cost - Residual Value) / Useful Life
$30,000 (Accumulated Depreciation after 2 years) = (Original Cost - $10,000) / 5
Original Cost = $85,000

An Asset Being Depreciated with the Straight-Line Method Has a Residual