Which of the following is the correct formula for calculating depreciation under the straight-line method?
A) Straight-line depreciation = (Cost + Residual value) / Useful life
B) Straight-line depreciation = (Cost - Residual value) / Useful life
C) Straight-line depreciation = (Cost + Residual value) × Useful life
D) Straight-line depreciation = (Cost - Residual value) × Useful life

Question

Quizplus · Accepted Answer

The straight-line method of depreciation calculates depreciation as the cost of an asset less its residual value, divided by the asset's useful life. Therefore, option B is the correct formula for straight-line depreciation. Option A adds the residual value to the cost before dividing by the useful life, which is incorrect. Option C multiplies the cost with the residual value and the useful life, which is also incorrect. Option D multiplies the cost by the residual value and the useful life, which is again incorrect.

Which of the Following Is the Correct Formula for Calculating