Question

Brinkman Corporation bought equipment on January 1, 2007 .The equipment cost $90,000 and had an expected salvage value of $15,000. The life of the equipment was estimated to be 6 years.

The depreciable cost of the equipment is

a. $90,000
b. $75,000
c. $50,000
d. $12,500

Answer 1

The depreciable cost of the equipment is b. $75,000

Step-by-step explanation:

Depreciable cost is the amount of an asset's cost that will be depreciated. Depreciable cost is calculated by total cost (purchase cost, installation cost, ...) of an asset minus its estimated salvage value.

Depreciable cost = Cost - salvage value = $90,000 - $15,000 = $75,000

From Depreciable cost, the company uses a depreciation method to charge depreciable cost to expense over the useful life of the equipment.