Question

Consider the following data on a car: Cost basis of the asset, CO = BD 10,000, Useful life, N = 5 years, Estimated Salvage value, CL = BD 778. Compute the annual depreciation.

Answer 1

The annual depreciation of the car, calculated using the straight-line method, is BD 1,844.40, based on the given cost basis, useful life, and estimated salvage value.

Step-by-step explanation:

To calculate the annual depreciation of an asset, such as a car, you can use the straight-line method of depreciation. This method subtracts the estimated salvage value of the asset from the cost basis and then divides by the useful life of the asset.

Given the data:

• Cost basis of the asset (CO) = BD 10,000
• Useful life (N) = 5 years
• Estimated Salvage Value (CL) = BD 778

The formula for straight-line depreciation is:

Annual Depreciation = (CO - CL) / N

Plugging in the values from the data provided:

Annual Depreciation = (BD 10,000 - BD 778) / 5

Annual Depreciation = (BD 9,222) / 5

Annual Depreciation = BD 1,844.40

Therefore, the annual depreciation of the car is BD 1,844.40.