Question

What is the annual straight-line depreciation expense for the Kubota tractor acquired on January 8 at a cost of $85,000, with an estimated useful life of 10 years and no residual value?

A) $8,500
B) $8,000
C) $85,000
D) $850

Answer 1

The annual straight-line depreciation expense for the Kubota tractor is $8,500.

Step-by-step explanation:

Depreciation refers to the gradual decrease in the value of an asset over time. It is a common accounting concept used to allocate the cost of a tangible asset (such as machinery, vehicles, buildings, or equipment) over its useful life. The purpose of depreciation is to match the cost of the asset with the revenue it generates or the benefits it provides over time.

The annual straight-line depreciation expense can be calculated by dividing the cost of the Kubota tractor by its estimated useful life. In this case, the cost of the tractor is $85,000 and the estimated useful life is 10 years. So, the annual straight-line depreciation expense would be $85,000 / 10 = $8,500.