Question

Which statement is true concerning the straight-line method of depreciation? Select one: a. Depreciation does not take salvage value into consideration b. Purchase cost is expensed in the year of acquisition c. Depreciation is recognized evenly over the estimated useful life of the asset d. Depreciation is equal to the proceeds received on sale less the amount paid to acquire the asset

Answer 1

c. Depreciation is recognized evenly over the estimated useful life of the asset

Step-by-step explanation:

Depreciation: The depreciation is an expense that shows a reduction in the value of the fixed assets due to tear and wear, obsolesce, usage, time period, etc. It is shown on the debit side of the income statement. It is a non-cash item that does not affect the cash balance.

So, under the straight-line method, the depreciation expense would be calculated by considering

= (Original cost - residual value) ÷ (useful life)