A company purchased a plant asset for $45,000.The asset has an estimated salvage value of $6,000 and an estimated useful life of 10 years.The annual depreciation expense using the straight-line method is equal to $3,900 per year.

Question

Quizplus · Accepted Answer

To calculate the annual depreciation expense using the straight-line method, we subtract the salvage value from the cost of the asset, and then divide by the useful life of the asset.
($45,000 - $6,000) / 10 = $3,900
Therefore, the annual depreciation expense using the straight-line method is indeed $3,900 per year.

A Company Purchased a Plant Asset for $45,000