To compute depreciation expense using the straight-line formula, the cost of a depreciable asset (i.e., equipment) must be reduced by any estimated residual or salvage value.

Question

Quizplus · Accepted Answer

This statement is true. Depreciation expense is calculated by subtracting the estimated residual or salvage value from the cost of the depreciable asset, and then dividing the difference by the asset's useful life. The straight-line formula is a common method used to calculate depreciation expense.

To Compute Depreciation Expense Using the Straight-Line Formula, the Cost