Question 10.2: Straight-Line Depreciation Equipment acquired at the beginni......

Financial Accounting [EXP-43430]

Straight-Line Depreciation

Equipment acquired at the beginning of the year at a cost of $125,000 has an estimated residual value of $5,000 and an estimated useful life of 10 years. Determine (a) the depreciable cost, (b) the straight-line rate, and (c) the annual straight-line depreciation.

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a. $120,000 ($125,000 – $5,000)

b. 10% = 1/10

c. $12,000 ($120,000 × 10%), or ($120,000/10 years)

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