Question

Which of the following is the correct formula for calculating deprecation under the straight-line method?

A) Straight-line depreciation = (Cost + Residual value) / Useful life
B) Straight-line depreciation = (Cost - Residual value) / Useful life
C) Straight-line depreciation = (Cost + Residual value) × Useful life
D) Straight-line depreciation = (Cost - Residual value) × Useful life

Answer 1

The correct formula for calculating depreciation under the straight-line method is (Cost - Residual value) / Useful life.

The correct option B.

Step-by-step explanation:

The correct formula for calculating depreciation under the straight-line method is Straight-line depreciation = (Cost - Residual value) / Useful life.

This formula takes into account the initial cost of the asset, the estimated residual value at the end of its useful life, and the number of years the asset is expected to be in use.

By subtracting the residual value from the initial cost and dividing it by the useful life, you can determine the annual depreciation expense.

The correct option B.