Oakland Company owns a fixed asset with an original cost of $100,000.Piston Company estimates it will use the asset for 5 years, at which time the asset can be sold for $10,000.The annual depreciation expense is_____.
A)$20,000
B)$10,000
C)$18,000
D)$-0-

Question

Quizplus · Accepted Answer

The annual depreciation expense for the straight-line method is calculated as:
Depreciation Expense = (Original Cost - Salvage Value) / Useful Life
Depreciation Expense = ($100,000 - $10,000) / 5 years = $18,000 per year. Therefore, the answer is C.

Oakland Company Owns a Fixed Asset with an Original Cost