A contractor purchases equipment for $85,000 with an estimated useful life of 8 years and salvage value of $5,000. Using straight-line depreciation, what is the annual depreciation expense?
Correct Answer
A) $10,000
Annual depreciation = (Cost - Salvage Value) ÷ Useful Life = ($85,000 - $5,000) ÷ 8 = $10,000
Why This Is the Correct Answer
Annual depreciation = (Cost - Salvage Value) ÷ Useful Life = ($85,000 - $5,000) ÷ 8 = $10,000
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