Equipment cost is $48,000, salvage value is $6,000, and useful life is 7 years. What is annual straight-line depreciation?
Correct Answer
A) $6,000.
Depreciable base is $48,000 - $6,000 = $42,000. Annual straight-line depreciation is $42,000 / 7 = $6,000.
Why This Is the Correct Answer
Depreciable base is $48,000 - $6,000 = $42,000. Annual straight-line depreciation is $42,000 / 7 = $6,000.
Why the Other Options Are Wrong
Option B: $6,857.
$6,857. is above the supported result for depreciation; it likely adds an unsupported amount or compares the wrong financial base.
Option C: $7,714.
$7,714. is above the supported result for depreciation; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $42,000.
$42,000. is above the supported result for depreciation; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Depreciation drawer for Setting Equipment: label depreciable before counting dollars.
Reference Hint
Study anchor (closed-book): memorize Depreciation from CSLB Law and Business Study Guide; CSLB 2026 Law Book / CSLB Law and Business Study Guide Business Finances; know the rule or calculation trigger without relying on exam-room lookup.
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