asset was purchased for $12,000. The asset's estimated useful life was 3 years and its residual value was $2,000. How much depreciation is deducted in the fourth year of use if the straight line method of depreciation was used?

Question

Quizplus · Accepted Answer

Using the straight-line method, the annual depreciation is calculated as (Cost - Residual Value) / Useful Life. Here, it's ($12,000 - $2,000) / 3 = $3,333.33 per year for 3 years. By the fourth year, the asset is fully depreciated, so no depreciation is deducted.

Asset Was Purchased for $12,000