Question

A refrigerator used by a wholesale warehouse has a cost of $89,000, an estimated residual value of $6,400, and an estimated useful life of 5 years. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answer in the question below. Open spreadsheet What is the amount of the annual depreciation computed by the straight-line method? Round your answer to the nearest dollar.

Answer 1

To compute the annual depreciation of the refrigerator using the straight-line method, deduct the residual value from the cost, divide by its useful life, and round to the nearest dollar, which gives $16,520 as the annual depreciation.

Step-by-step explanation:

To calculate the annual depreciation for the refrigerator using the straight-line method, you need to subtract the estimated residual value from the cost of the refrigerator and then divide that amount by the useful life of the refrigerator. The formula for calculating straight-line depreciation is as follows:

Annual Depreciation = (Cost - Residual Value) ÷ Useful Life

Using the given figures:

Annual Depreciation = ($89,000 - $6,400) ÷ 5 years

Annual Depreciation = $82,600 ÷ 5 years

Annual Depreciation = $16,520 per year

Rounding this to the nearest dollar, the annual depreciation would be $16,520.

Answer 2

Annual Depreciation = $ 16,520

Step-by-step explanation:

Depreciation: Depreciation is the systematic allocation of cost of an asset over its useful life.

Straight Line Depreciation: Its is a method of depreciation that spreads the cost of an asset over the useful life equally.

Formula: Annual Depreciation = (Cost of Asset - Residual Value) ÷ Useful Life.

Annual Depreciation = ($89,000-$6,400) ÷ 5

Annual Depreciation = $ 16,520.