Question

What will be the depreciation, via the straight line method, if the cost of a plant is $43,250, estimated disposal value is $3,250, and the estimated useful life of plant is five years?

Answer 1

Answer:

depreciation expense per year 8,000

Explanation:

The first step, is to calculate the depreciable amount for the asset:

cost - salvage value = amount subject to depreciation

43,250 - 3,250 = 40,000 = depreciable amount

Then, we calculate the depreciation per year:

depreciable amount/ useful life = depreciation per year

40,000/5 = 8,000

In some particular cases, the first year the asset enter the accounting it could be for a period of half the accounting period, so only half-year depreciation is appliedon the first year.