Straight-line depreciation is cost minus salvage value .Therefore , cost minus salvage value is correct .
Straight-line depreciation is a commonly used method for allocating the cost of an asset over its useful life.
The formula for calculating straight-line depreciation involves the initial cost of the asset, its salvage value, and its productive or useful life.
The correct formula for straight-line depreciation is (cost minus salvage value) divided by useful life.
This formula reflects the gradual reduction in the value of the asset over its estimated useful life, with the salvage value representing the estimated residual value at the end of its useful life.
The numerator, (cost minus salvage value), represents the total depreciation or the reduction in the value of the asset over its lifespan.
The denominator, useful life, indicates the number of years the asset is expected to contribute to the business before being retired or replaced.
For example, if a company purchases equipment for $10,000, expects it to have a salvage value of $1,000 at the end of its useful life, and estimates a useful life of 5 years, the straight-line depreciation would be ($10,000 - $1,000) / 5 = $1,800 per year.
The correct formula for straight-line depreciation is (cost minus salvage value) divided by useful life, as it accurately reflects the gradual reduction in the asset's value over its expected lifespan.