Question

Bonita Industries purchased a depreciable asset for $174500. The estimated salvage value is $14300, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset?

Answer 1

Answer:

Annual depreciation= $16,020

Explanation:

Giving the following information:

Purchase price= $174,500

Salvage value= $14,300

Useful life= 10 years

To calculate the depreciable base, we need to use the following formula:

Depreciable base= purchase price - salvage value

Depreciable base= 174,500 - 14,300

Depreciable base= $160,200

Now, we can determine the annual depreciation:

Annual depreciation= depreciable base /estimated life (years)

Annual depreciation= 160,200 / 10

Annual depreciation= $16,020