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.72. The depreciable cost of the equipment isa. $90,000b. $75,000c. $50,000d. $12,500

Answer 1

Answer:

b. $75,000

Explanation:

Depreciable cost is the amount of an asset's cost that will be depreciated. Depreciable cost is calculated by using purchase and installation cost of a fixed asset, minus its estimated salvage value at the end of its useful life.

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

The company then uses a depreciation method, such as the straight-line method, to calculate depreciation expense of the equipment.

Example:

Annual Depreciation expense = $75,000/6 = $12,500