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 approximate life of the asset?

Question

Quizplus · Accepted Answer

The formula for straight-line depreciation is: (Cost of asset – Residual value) / Estimated life of asset. 
Therefore, the estimated life of the asset can be calculated as follows: (11,000 – 1,000) / 2,000 = 5 years.

Mark Industries Uses the Straight-Line Depreciation Method