Question

Falcon Company purchased a depreciable asset for $125,000. The estimated salvage value is $10,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset?

a. $11,500
b. $12,500
c. $115,000
d. $125,000

Answer 1

c. $115,000

Step-by-step explanation:

Given;

Cost of asset = $125,000

Salvage value = $10,000

Useful life = 10 years

Method of depreciation is straight line

Depreciation base = Cost - Salvage value

= $125,000 - $10,000

= $115,000

The depreciation base which is the total charge to depreciation from the beginning period to the end period of the asset is $115,000.