Question

On December 1, 2016, Acme Company places a new asset into service. The cost of the asset is $50,000 with an estimated five-year life and $10,000 salvage value at the end of its useful life. What is the depreciation expense for 2017 if Acme Company uses the straight-line method of depreciation?

Answer 1

Answer: $8000

Explanation: Under straight line method of depreciation, the book value of an asset is spread over its useful life . It can be computed using following formula :-

`=\:(Initial cost\:-\:salvage\:value)/(useful\:life)`

putting the values into equation we get,

`=\:(50,000\:-\:10,000)/(5)`

therefore,

depreciation expense = $8000