A forklift had a purchase price of $18,000, delivery costs of $2,000, a physical life of 6 years and a useful life of 4 years. Estimated residual value is zero. The annual depreciation charge using the straight-line method is:
A)$1,667.
B)$3,000.
C)$2,500.
D)$5,000.

Question

Quizplus · Accepted Answer

The straight-line depreciation method calculates annual depreciation by subtracting the residual value from the purchase price and dividing by the useful life. Here, ($18,000 + $2,000 - $0) / 4 years = $5,000 per year.

A Forklift Had a Purchase Price of $18,000, Delivery Costs