A concrete pump cost $96,000, has an $8,000 salvage value, and is depreciated straight-line over 5 years. What annual depreciation is recorded?
Correct Answer
B) $17,600
Depreciable cost is $88,000. Spread over 5 years, annual depreciation is $17,600.
Why This Is the Correct Answer
Depreciable cost is $88,000. Spread over 5 years, annual depreciation is $17,600.
Why the Other Options Are Wrong
Option A: $16,800
$16,800 is below the supported result for straight-line depreciation; it likely uses the wrong base, period, or account bucket.
Option C: $19,200
$19,200 is above the supported result for straight-line depreciation; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $20,800
$20,800 is above the supported result for straight-line depreciation; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Equipment Manager money test: bucket before math for straight-line.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section Two, Equipment Records, Depreciation and Depreciation Methods; use the job ledger figures in the stem and recompute the same accounting measure.
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