A company purchased a building at a cost of $280,000 on January 1. The building is estimated to have a useful life of 15 years and a $40,000 salvage value. The company uses the straight-line method of depreciation. What is the amount of depreciation expense for the building for the second year?
A)$16,000
B)$18,667
C)$264,000
D)$32,000
E)$248,000

Question

Quizplus · Accepted Answer

The straight-line depreciation method calculates annual depreciation by subtracting the salvage value from the cost and dividing by the useful life. ($280,000 - $40,000) / 15 = $16,000 per year.

A Company Purchased a Building at a Cost of $280,000