Mark Industries uses the straight-line depreciation method. One asset had been purchased for $11,000. Annual depreciation expense was $2,000 after considering residual value of $1,000. What was the estimated useful life of the asset?

Question

Quizplus · Accepted Answer

The estimated useful life of the asset is calculated by dividing the depreciable amount by the annual depreciation expense. The depreciable amount is the cost of the asset minus its residual value: $11,000 - $1,000 = $10,000. Dividing this by the annual depreciation expense of $2,000 gives a useful life of 5 years.

Mark Industries Uses the Straight-Line Depreciation Method