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Under the Straight-Line Method, how is annual depreciation calculated?

Practice Questions

Q1
Under the Straight-Line Method, how is annual depreciation calculated?
  1. Cost of Asset / Useful Life
  2. Cost of Asset - Salvage Value
  3. Salvage Value / Useful Life
  4. Cost of Asset x Depreciation Rate

Questions & Step-by-Step Solutions

Under the Straight-Line Method, how is annual depreciation calculated?
  • Step 1: Determine the Cost of the Asset. This is the total amount paid to acquire the asset.
  • Step 2: Determine the Useful Life of the Asset. This is the number of years the asset is expected to be used.
  • Step 3: Divide the Cost of the Asset by the Useful Life. This gives you the annual depreciation amount.
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