Question

Q 9.30: On December 1, 2016, Acme Company places a new asset into service. The cost of the asset is $50,000 with an estimated five-year life and $10,000 salvage value at the end of its useful life. What is the depreciation expense for 2017 if Acme Company uses the straight-line method of depreciation

Answer 1

Annual depreciation 2017= $8,000

Step-by-step explanation:

Giving the following information:

The cost of the asset is $50,000 with an estimated five-year life and $10,000 salvage value at the end of its useful life.

To calculate the depreciation expense under the straight-line method, we need to use the following formula:

Annual depreciation= (original cost - salvage value)/estimated life (years)

Annual depreciation= (50,000 - 10,000)/5

Annual depreciation= $8,000