A lift cost $132,000, has a $12,000 salvage value, and is depreciated straight-line over 8 years. What annual depreciation is recorded?
Correct Answer
B) $15,000
Depreciable cost is $120,000; divided by 8 years gives $15,000.
Why This Is the Correct Answer
Depreciable cost is $120,000; divided by 8 years gives $15,000.
Why the Other Options Are Wrong
Option A: $14,000
$14,000 is below the supported result for straight-line depreciation; it likely uses the wrong base, period, or account bucket.
Option C: $16,500
$16,500 is above the supported result for straight-line depreciation; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $18,000
$18,000 is above the supported result for straight-line depreciation; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Straight-Line drawer for Equipment Manager: label depreciable before counting dollars.
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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