Madison Industries uses the straight-line depreciation method.One asset had been purchased for $9, 000.Annual depreciation expense was $800 after considering residual value of $1, 000.What was the approximate life of the asset?

Question

Quizplus · Accepted Answer

The life of the asset can be calculated by dividing the depreciable amount by the annual depreciation expense. The depreciable amount is the cost of the asset minus its residual value ($9,000 - $1,000 = $8,000). Dividing this by the annual depreciation expense ($8,000 / $800) gives 10 years.

Madison Industries Uses the Straight-Line Depreciation Method