   Chapter 10, Problem 10.6EX

Chapter
Section
Textbook Problem

Straight-line depreciationA refrigerator used by a wholesale warehouse has a cost of $64,000, an estimated residual value of$5,200, and an estimated useful life of 12 years. What is the amount of the annual depreciation computed by the straight-line method?

To determine

Straight-line Depreciation: Under the straight-line method of depreciation, the same amount of depreciation is allocated every year over the estimated useful life of an asset. The formula to calculate the depreciation cost of the asset using the residual value is shown as below:

Depreciation cost = (Cost of the assetResidual value)Estimated useful life of the asset

To determine: the amount of annual depreciation computed by the straight-line method.

Explanation

Determinethe amount of annual depreciation computed by the straight-line method

Cost of the refrigerator= $64,000 Estimated Residual value =$5,200

Estimated Useful Life =12 years

AnnualDepreciation = (Cost of the assetResidual value)Estimated useful life of thex

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